A new money god: introducing VOLT
TLDR; this post introduces Volt Protocol, an authorized or “friendly fork” of RAI, as the newest member of the money god league. VOLT is multicollateral RAI. The FLX-like governance token of the system is VCON, the voltage control token. A portion of the VCON supply will be distributed to the Reflexer community.
Money God League?
RAI is the first “reflex index”, a free floating stable currency on Ethereum whose price is stabilized by an incentives system without a dollar peg or reliance on trusted collateral.
The fact that RAI can be minted only against ETH is both a strength and a limitation – it ensures RAI has minimal collateral risk and can be regarded as the most trustworthy stable asset on the Ethereum network. On the other hand, it means most types of borrowing collateral don’t have access to the robust stability mechanics of RAI.
Enter the money god league. The Reflexer team has explored making the technology behind RAI accessible to other protocols and assets. For example, there was previously a proposal to create a DPI-backed reflex asset, take a look at it here.
It’s our belief that there is room in the market for several “money gods”, each with a different backing and thus different risk profile and yields available. If RAI sits at one end of the spectrum (the safest possible collateral, minimized governance, focused on being the most secure and trustworthy stable asset possible), what’s on the other side?
Why VOLT Protocol
Imagine a future with thousands or tens of thousands of on chain assets. It’s impossible for MakerDAO style governance (with a vote needed every time collateral factor is adjusted, new asset onboarded, etc) to scale to this level. The objective of VOLT is to bring the stability mechanisms of RAI to every legitimate on chain collateral.
Volt v1 is the same code as RAI applied to new collateral types such as DeFi tokens. Like MakerDAO, governance will judge which collaterals to include and adjust their parameters. The goal at launch is to support assets underserved by other lending providers like Compound or Maker, that will also have the high yields needed to promote supply growth for VOLT.
Our longer term vision (our flavor of “ungovernance”), is unbundling the powers that are normally used for DAO-wide votes so they can be used by individual VCON holders. For example, in v2, instead of a single staking pool like FLX staking, VCON holders will stake per collateral asset, underwriting risk and earning fees from the target asset as well as influencing parameters like the asset debt ceiling. More details on v2 plans to come, but I wanted to share the goal and mindset we are taking.
Volt Protocol is a friendly fork working cooperatively with the Reflexer team on our launch. In line with this, we will allocate 6% of total VCON supply to the Reflexer community.
The distribution is planned to occur over 18 months via staking contracts. 4% will be available to FLX/ETH LP holders and 2% to RAI Curve LP holders who stake.
The 6% allocation to the Reflexer community can be considered final, the nature of the disbursement is subject to change based on the preferences of the Reflexer community and any practical considerations that may arise.
We’d love to see overlap between our communities, so if you’re interested in VOLT please come get involved.
VOLT intends to support every legitimate form of on chain collateral. This means there are a few places we can plug into the existing Reflexer systems, and I’d love to hear ideas from the community on this as well. For example:
- Mint VOLT using RAI deposit receipts from other platforms
- Deposit RAI into a Fuse pool and get back fRAI. Mint VOLT against this fRAI to engage in leveraged RAI lending
- Mint VOLT using FLX or RAI LP pairs
- Increase capital efficiency for LPs by allowing them to use their liquidity positions as collateral
What’s the timeline?
We’re working on all the preparations needed for launch, the hope is to deploy v1 in December. One of the things we’re doing is licensing the PI/D code (which handles RAI’s target price adjustment) from Reflexer labs. We hope this process will help set the stage for other future money gods (hint hint, you might hear about more in the near future).
Who is behind VOLT?
I am @OneTrueKirk on twitter, the initiator of the VOLT and a long time admirer of both the MakerDAO and Reflexer systems. The project is affiliated with the Rari protocol, essentially “incubated” there as a task force. I received a lot of support and feedback from the Rari team during the early stages, and the Rari DAO will also be receiving a share of the VCON supply.
We’re actively searching for contributors, in particular for one or more experienced Solidity developers to partner with me implementing v2. If that’s you please get in touch by sending me a DM on either Twitter or Discord.
Where can I learn more?
It is early and there’s not yet an official website or docs up for the project. We have a discord that is slowly transitioning from its wild west days to a more organized form, please join here if you are interested. Volt Also happy to answer questions here.
Soon we’ll have a public github or website up with more detailed information about the timeline, which collaterals we want to focus on at first, full tokenomics, etc.
Wanted to express my gratitude to Stefan who has been my main point of contact with the Reflexer team and to the community as a whole for being supportive of this project. I count myself very lucky being able to iterate on the great work that’s been done up till today and still ongoing in the Reflexer community.