Post by @voltz • Hey
Today we’re announcing Voltz v2, a non-custodial clearinghouse for any derivative instrument.
The generalisable design creates a building block upon which
Comments
- 9/ For instruments and exchanges to exist on top of Voltz v2, we introduce novel concepts of Instrument and Exchange abstractions. This design allows any exchange to integrate with an instrument in the Voltz Universe, and for the creation of new instruments e.g. Options
- 3/ Voltz Protocol v2 solves this issue. It creates a generalisable margin account that can be used to support derivative positions across different instruments and exchanges, removing liquidity fragmentation for traders and market makers.
- 12/ The roll-out of v2 will be phased throughout 2023. With the first version set to launch in an MVP state with Voltz v1 vAMM acting as the first exchange operating on top of the generalisable margin engine.
- 5/ Long-term, v2 has the potential to displace every clearinghouse in the world and become the financial backbone for >null,000tn of derivative trading volume.
⚡⚡
- 11 cont../
⚡Free up DEX teams to focus on developing more efficient pricing mechanism, rather than building the entire stack required for derivative exchanges
⚡Provide DEX teams with an immediate source of liquidity and ecosystem of active traders
- 1/ DeFi has seen a proliferation of DEXs. The innovation has been incredible. However, it has inadvertently created liquidity fragmentation for traders and market makers, who are required to post margin to multiple exchanges even in instances where those positions are offsetting.
- 10/ This generalisability means traders could open a position via one exchange and close a position on another, since both exchanges are using the same instrument logic. In turn this design allows for modules like smart-order routing to be built.
- 4/ Alongside this, the margin engine facilitates cross-margining of different collateral assets, positions of the same instrument and positions of different instrument type. In turn, allowing for atomic execution, clearing and settlement of any derivative instrument.
- 11/ In the short term, v2 has the potential to:
⚡Remove liquidity fragmentation across venues
⚡Provide significant capital efficiency benefits for makers and takers
⚡Provide a mechanism for makers and takers to trade across multiple venues at once and to earn better pricing
- 6/ The generalisable design of v2 is enabled by a novel on-chain risk matrix, that is able to account for the risk of any asset and any combination of assets. This design uses a covariance matrix that is estimated off-chain from historical market data.
- 8/ The Margin Engine also allows for a number of other exciting features, including segregated accounts and collateral cross-margining, which can exist in three different forms depending on the instruments a trader or market marker is exposed to.
- 13/ Interested in learning more? Read the full litepaper here:
https://voltz.xyz/voltz-v2
- 7/ It is then converted into a risk matrix with shocked volatilities on-diagonal and correlations off-diagonal. Importantly, this means traders can offset positions across different exchanges, removing the requirement to post margin twice.
- 2/ This is not a DeFi only issue - the same has been observed in Traditional Finance where regulatory change (e.g. MiFID II in Europe) led to a similar proliferation of trading venues, and the subsequent unintended fragmentation of liquidity.
- 14/ You can also join our Community Townhall on discord today @ 3.30pm UTC, where we will be talking about v2, the rollout and future roadmap
https://discord.com/invite/NZgsbT8kWX
- Volz 💎
- Hello Voltz 💎