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Protocol Overview

Voltz Protocol Overview


The diagram below describes the high level architecture of Voltz Protocol:
Voltz Protocol Architecture
  • At the heart of the Voltz Protocol is the Factory that is responsible for the deployment of Interest Rate Swap (IRS) pools.
  • Each (IRS) pool works on top of a yield-bearing pool that produces variable rates of return (e.g. Aave v2 aUSDC lending pool).
  • Each IRS pool has an inception date and a maturity date at which the swaps are settled.
  • Each (IRS) pool is made up of three key components (contracts): Margin Engine, Virtual Automated Market Maker (vAMM) and Full Collateralization Module (FCM):
    • Margin Engine: is responsible for the management of position margin, cashflows and liquidations.
    • vAMM: is responsible for price discovery for the initiation of interest rate swaps.
    • Full Collateralization Module (FCM): enables traders to enter into fully collateralized fixed taker positions by depositing margin in the form of the yield-bearing asset (e.g. aUSDC) instead of the underlying token (e.g. USDC)
  • Since rate data is necessary for IRS settlements and calculations of position margin requirements, the system has a single contract to store and expose the rate history for any given yield bearing token. Such a contract is a fully on-chain Rate Oracle.
  • Periphery is a wrapper smart contract through which Voltz Protocol users can seamlessly add liquidity, remove liquidity, enter into an IRS contract or update position margin.
  • Positions with insufficient amount of underlying tokens below the liquidation threshold in their margin account are at risk of being liquidated by a pool of liquidator bots.