💡 How It Works
A high level overview of how Volt Protocol works currently and how it will work under market governance.
Minting VOLT or redeeming for stablecoins
You can mint VOLT using either DAI or USDC, and can redeem for either so long as there is a sufficient balance in the system. There is no fee to mint or redeem.
A traditional yield aggregator or lending market accepts deposits of a certain stablecoin, like DAI or USDC, and gives a deposit receipt, like yvDAI for Yearn or cUSDC for Compound.
Volt Protocol on the other hand gives VOLT no matter what was deposited, and can optimize which stablecoins it holds to earn a higher yield.
Right now only DAI and USDC are supported, but more can be added in the future. At any time, Volt Protocol will hold whichever of DAI or USDC it can earn higher yields on in its supported venues.
Safety through the surplus buffer
Volt Protocol targets a surplus buffer (first loss system capital) of 5-20% of the VOLT supply. This protects VOLT holders to a large extent from losses in any yield venue, and also means that if there is heightened demand to redeem, the VOLT yield rate can be increased to attract more liquidity and provide for redemptions at peg. This is a similar mechanism to the utilization-based rates on Compound or Aave.