Disrupting a Quadrillion Dollar Market

June 14, 2022

Voltz CEO Simon Jones features in this episode of Bankless Alpha Leak

Listen to this EP of Bankless

A quadrillion dollars is a cartoonishly large number to visualise. The fact that Interest Rate Swaps - the bedrock from which that Goliath of a figure is hewn - are little known even to sophisticated actors, makes that number appear even more abstract. However, if we zoom out to a macro view of traditional finance we find that IRS are the foundational layer enabling a myriad of financial use cases.

These use cases fall into three main buckets:

  1. Risk Management
  2. Speculation
  3. The construction of a broad spectrum of financial products for corporate and retail.

Whilst most of retail have yet to hear of Interest Rate Swaps, many will be familiar with products constructed by it. When a fixed rate mortgage is taken out, the lending institution is using super low level capital infrastructure (ie an Interest Rate Swap) in order to package up that product for a consumer. 

For DeFi to achieve its implicit ambition of becoming the globe's financial system, it first has to become a viable competitor to TradFi. Quite simply, without Interest Rate Swaps as low level infrastructure, DeFi can never hope to construct the vast array of products which generate utility across finance. The kind of utility which we have come to take for granted across society, irrespective of understanding the foundation that utility stands on.

"DeFi is an ecosystem that is structurally variable" - Simon Jones

What Interest Rate Swaps unlock at the most macro levels is the ability to build in structural stability for those that want it, opening up a new paradigm of cashflow, products and possibilities in DeFi. Volatility is what has on boarded so many early adopters to date but [at time of writing] the utility of Interest Rate Swaps in TradFi alone generates 1000 times the market cap of the entire crypto market. 

Voltz Protocol now makes it possible to build that utility in DeFi. This conversation between Simon Jones and David Hoffman detail the bull case for Voltz Protocol and the builders, traders and liquidity providers that leverage the opportunity it presents.

"The bull case for Voltz is that rate markets are driven off supply/demand dynamics in DeFi. Not 12 dudes at the Fed making decisions behind closed doors" - Bankless

watch the episode in full.