Voltz Protocol Brings a Wall Street Rates Stalwart to DeFi

SOFR – which Voltz’s new product is tied to through the Avalanche blockchain – is used to set interest rates on TradFi loans, bonds and other products in the U.S.

AccessTimeIconMay 24, 2023 at 2:00 p.m. UTC

Voltz Protocol, an automated market maker (AMM) for interest-rate swaps, is bringing one of the stalwarts of traditional finance (TradFi) on-chain.

Anyone who can access Voltz will be able to trade products tied to the Secured Overnight Financing Rates (SOFR) – a benchmark used to set interest rates on loans, bonds and other credit products in the U.S. – on Avalanche’s layer-1 blockchain, according to a statement Wednesday.

SOFR is not well-known to the public, but it’s a key part of American finance. Bringing it into an on-chain environment is yet one more step toward shifting TradFi onto crypto infrastructure.

Even before the Voltz announcement, companies and investors could already hedge their exposure to SOFR through conventional markets, including Chicago-based CME Group’s exchange. But in announcing its new product, Voltz said it was broadening access to SOFR hedging with its on-chain solution.

“Only a handful of institutions have access to interest rate swap markets that allow them to hedge” SOFR exposure, Voltz CEO Simon Jones said in the statement. “The launch of SOFR on Voltz Protocol changes this whilst simultaneously bridging the two financial worlds by making traditional financial markets accessible on [decentralized finance (DeFi)] rails.”

RedStone will be the oracle provider – AKA it will supply the raw data on SOFR from the TradFi realm.

Edited by Nick Baker.


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Lyllah Ledesma

Lyllah Ledesma is a CoinDesk Markets reporter currently based in Europe. She holds bitcoin, ether and small amounts of other crypto assets.