Voltz is an Automated Market Maker (AMM) for Interest Rate Swaps.

Lets be very basic, an AMM essentially manages the inflow and outflow for the pool of assets, in order to make sure we can all trade with the pool (remember x*y=k). In case of Voltz, the AMM is divided into 2 parts the Virtual AMM (vAMM) and the Margin Engine.

Interesting note

The vAMM is used for price discovery only, this means we decide on the price through the VAMM, however the execution is completed on the Margin Engine. This is how Voltz can achieve the insane 3000x efficiency and flexibility.

Now let’s check Interest Rate Swaps, I will try explain why we need them in DeFi. One of the biggest pillars of TradFi is that it can give us fixed interest rates on borrowing or depositing, which allows us to plan and predict our money supply. However, that is not quite possible in DeFi, this is where Voltz comes in and gives the opportunity to swap those variable rates of ours in DeFi. I see this unlocking two huge opportunities, clients can plan their interest earnings with fixed rates thus more stability for the average joe and second is, this unlocks arbitrage and new tools for the variable takers who want that risk (the degens).

TradFi:

• Imagine you have a mortgage, on Voltz you can trade the mortgage interest rate either as Fixed Taker or Variable Taker. Given you are paying variable rates, you can swap them for fixed rates, thus paying fixed interest rate got your mortgage.

DeFI:

• Lets say we are supplying on compound and get cTokens (which constantly accrue variable interest rate), this variable rate can be swapped for a fixed rate on Voltz. Thus giving you a piece of mind on your asset returns, rather than speculate on the variable rates on Compound.

I hope you can more clearly see why Voltz is such a crucial infrastructure component for the entirety of DeFi.

PS.

Obviously my TradFi example is not possible for Voltz (yet)