voltz protocol official website

Investors are positioning to reap the widely-awaited gains of the upcoming Ethereum “Merge” – an event that will change the smart contracts’ network consensus mechanism from proof-of-work (PoW) to the eco-friendlier proof-of-stake (PoS).

Many strategies have been adopted to get exposure to ETH ahead of this major catalyst including taking up leveraged bets on futures or borrowing synthetic assets that can be bought and HODLed through some of the best crypto lending platforms that are still standing.

Recently, a new platform has emerged to give traders another way to potentially profit from a post-Merge rally. This is the case of Voltz, a platform that is offering an annual percentage yield of 150% to those who bet on an expected increase in staking yields for Ethereum by using stETH (Lido) and rETH (Rocket) liquidity pools.

Voltz Protocol Provides Exposure to Credit-Market Derivatives

Voltz is an automated market-maker (AMM) of interest rate swaps (IRS), a financial derivative that allows traders to bet on upcoming swings in the interest rates paid by a certain asset. IRSs are not new. They are widely used by investors and speculators in the traditional financial markets to both hedge and bet on upcoming changes in the credit market.

According to the protocol, the AMM the developing team has designed is 3,000 more efficient when it comes to deploying capital while it enables traders to access leverage ratios of up to 15x to increase their exposure to some of the IRSs offered by the protocol.

With IRSs, traders can bet on ETH upcoming staking yields and assume the risk that the Merge event will take place as expected. According to the latest updates from the developing team, the Ethereum 2.0 mainnet should be launched somewhere in September.

However, the merge has been postponed in the past and there are no guarantees that this time will be different.

According to the company’s official website, Voltz has been backed by top investors in the crypto space including Stani Kulechov from the Aave Protocol and Kain Warwick from Synthetix. In addition, the firm has also received funding from Fabric Ventures and Wintermute Ventures.

Voltz is restricted to users in various territories and it has been reported that the restrictions cannot be circumvented even if a virtual private network (VPN) is set up.

How Do Synthetic Assets Work?

Synthetic tokens provide exposure to an underlying asset such as a cryptocurrency without the need to buy it directly. These assets are bought for various purposes including the possibility of using layer-two protocols instead of relying on layer-one blockchains that are typically more expensive and slower.

Staked Ether (stETH) is a synthetic asset created by Lido Finance that tracks the price of the native token of the Ethereum network. Lido created this product to give investors the chance to stake ETH on the upcoming Ethereum 2.0 network without necessarily investing the minimum of 32 ETH required by the smart contracts platform. For ETH, Lido Finance currently offers a 3.9% APR while it has nearly $7.7 billion in staked assets at the moment.

Also Read: Ethereum News – stETH Loses Peg to ETH

Meanwhile, Rocket ETH (rETH) is a platform through which investors can stake their ETH tokens on the Ethereum 2.0 network with a lower minimum investment of 16 ETH instead of 32 ETH. Currently, the platform offers an average 4.03% APR to depositors and a 4.91% APR for depositors who also opt to run a Rocket node. Currently, a total of 207,264 ETH have been staked through this platform valued at $3.7 billion.

Interest rate swaps allow traders to make directional bets on the credit market of a particular asset. They can also be used to hedge against changes in the macroeconomic environment as investors could buy the swaps if they expect that interest rates will rise so they can offset an increase in their borrowing costs by the gains they make on these instruments.

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