Volt Protocol: Preserving Your DeFi Purchasing Power

By Cje95 | Chronic Illness and Crypto | 20 Apr 2022


It is now common to see different crypto startups raising millions of dollars at a time. However, what is much rarer to see is crypto make headlines when it only raised $2 million USD. That though was the headline that a new protocol called Volt had raised $2 million and was looking to become a stablecoin that fights inflation or a fork of "USD to remove inflation". 

 

When I began to read about Volt it immediately struck me that it was working to solve the issue that one of our tipping tokens, Ampleforth (AMPL), is trying to solve purchasing power. The purchasing power of the USD has fallen for years now and that was before we ran into the growing inflation issue. This space appears to have only been vaguely touched by different groups and people continue to pour their money into stablecoins even as these now suffer from the inflation bug.

 

Ampleforth's AMPL attempts to deal with this issue by having an elastic supply that can be increased or decreased to keep your purchasing power the same. An issue I have run into with AMPL because of its elastic nature is AMPL dust. While in the crypto world there are far worse things to run into this is just something that bothers me. It will also be interesting to see if AMPL can keep up with buying power tanking due to inflation. Since this has happened so fast and so severe I do not know if the coin can survive this issue. 

 

This is where Volt comes into play and the unique approach it is taking on the idea of a stablecoin. Most stablecoins are pegged to whatever currency you want and your options are centralized like USDC or decentralized like DAI. Volt would create an entirely new option though as it would not be pegged to the USD, crypto assets, or anything like that. It would instead be pegged to the CPI. 

 

So what is the CPI and why would you want your stablecoin pegged to it?

 

The answer is simple and easy to understand, something that can be hard to find in the crypto industry. CPI stands for the Consumer Price Index and what it does is measure price changes across a wide section of the economy. This is done to try and get the most accurate inflation report that can be provided. Each month the U.S. Bureau of Labor Statistics releases the inflation number comparing the current price of goods to what it was 12 months ago. This last reading comes out at 8.5% which is how we know inflation is at 8.5%. 

 

By pegging a stablecoin to this number instead of the US Dollar, the Euro, Gold, or a basket of currencies you enable a critical thing. Buying power remains the same. This is something that AMPL tries to address with its elastic supply and while it has done a pretty good job in my opinion pegging a stablecoin to this would set a gold standard. Current stablecoins like USDC, USDT, and UDT track the dollar's price and this has been eroded by inflation. 

 

What could be unlocked

For a while now I have been a huge fan of stablecoins as they have provided fantastic returns on investment given the low-interest-rate period we are in right now. However, with monetary policy fluctuating and the underlying need to increase the interest rate stablecoin yields are not as powerful as they once were.

 

With VOLT whatever purchasing power you invested will be secured with the CPI readings. It is important to note that the Fed does not want inflation to ever drop to zero or turn negative. Rather they would like to keep the number much much lower around 2% give or take. With continual growth occurring and expected the protocol does not need to worry about negative CPI numbers. 

 

If you were to yield farm with this token you would be able to create 100% pure gains. With the purchasing power backed by the economy whatever yield farming amount you make is pure profit (minus whatever the transaction fees are of course). This circles back to what I said earlier about current stablecoins as USDC and USDT do not go as far as they did 4 or 5 months ago and this idea would prevent this issue. 

 

Upcoming Launch

This upcoming Friday, April 22 at 12 PM PST Volt's Mainnet will be going live! Initially, Volt will only be able to be created using two different means but this will evolve. The first way is by swapping FEI for VOLT as the Fei Protocol is designed to provide deep liquidity for DAOs. The other option is to mint and borrows VOLT against collateral like ETH in the FeiRari DAO Fuse Pool 8. 

 

Now at launch, there will be 40 million VOLT available for issuance through Fuse. The VOLT DAO will also be providing 100k VOLT in initial liquidity to Uniswap v3 to facilitate a lower cost of obtaining smaller quantities of VOLT. If you are interested in this protocol there also is a current Volt meme and content contest that has a 5k VOLT prize pool and a 2.5k VOLT grand prize! 

 

Final Thoughts

Volt Protocol takes the stablecoins we currently have and transforms them in a way that functions well and the way one would want in a high inflation time. While AMPL has done a really good job at trying to bridge the gap between the traditional stablecoins and purchasing power it still does fall short. Based on Volt's design and aim it could be the first to unlock the next generation of stablecoins for the DeFi space that protects your purchasing power ability. 

 

Please know I am not a financial advisor I am just someone who picked up on a trend and wanted to express it! Makes sure you always do your own research and never invest money you cannot afford to lose! If you enjoyed this article and would like to further support me below are a couple of referral links that if you used when signing up I would appreciate it! Also, follow me on Twitter @Cje95_

 

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Cje95
Cje95

Graduated from Texas A&M in May of 2020 had dabbled in crypto since 2017 but dove in at the end of 2019. December of 2020 packed up and moved to D.C.! Huge sports fan, space nerd, and international newsreader! Follow me on Twitter @Cje95_


Chronic Illness and Crypto
Chronic Illness and Crypto

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