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What are Volts?
Passive, quantitative strategies generating returns based on market opportunities. Volts allow anyone to access strategies that are built with risk & returns, principal protection, and volatility in mind.
These Volts are currently accessible on Friktion!
Volt ID (fToken) | Volt Strategy | Best market environment |
|---|---|---|
Volt#01: Income generation (fcAsset) | Mild bullish to bearish | |
Volt#02: Sustainable stables (fpAsset) | Bullish | |
Volt#03: Crab Strategy
(fcrabAsset) | Flat: Range-bound/sideways market | |
Volt#04: Basis Yield
(fbasisAsset) | Arbitrage spot vs perpetual prices with a delta-neutral basis position. | Long basis: Negative funding rates
Short basis: Positive funding rates |
Volt#05: Capital Protection (fprotectAsset) | Volatile markets with rising interest rates |
Volts #01 and #02 offer High and Low Voltage options, which represent risk-tiers within the strategy. Read more about Voltage here.
Volts operate in time windows, called Epochs, (1 or 2 weeks depending on the asset/strategy).
- Epochs begin and end on Fridays (2 AM UTC). At the start of an Epoch, the Volt strategy is deployed.
- Volt#01 and Volt#02 asset auctions occur through a highly competitive, blind gradual Dutch auction on-chain (using Channel RFQ). Similar to leading liquidity auctions, option buyers bid on-chain for the asset being traded in the Volt.
Deposit/withdraw flow
The way Friktion handles deposits and withdrawals is complex. The complexity exists for a reason though, because Friktion is carefully engineered to fit certain constraints:
- Security: The pending deposit and withdrawal is necessary because entering/exiting mid epoch could be abused to unfairly dilute yields of other participants or even worse drain balances of other participants. The design of Friktion prioritizes safety by having these pending states.
- Composability: Friktion Volt tokens (fcSOL, fcBTC, fpBTC, etc) are similar to LP tokens in that they represent a pro-rata ownership of the pool. These share tokens are technically a "rebasing token", meaning it will change in value relative to the deposit token. So if you have 10 fcSOL today, you will still have 10 fcSOL a year later, but in that time 1 fcSOL might be worth 20 SOL.
- This maximizes the ability for protocols to compose on Friktion because these fTokens could be used in AMMs and as collateral in lending platforms. You can also participate in liquidity mining yield farms to give users extra yields on top. This composability is the reason there is a "Mint Shares" functionality in the app!
- An example: currently you can stake fcmSOL (by depositing mSOL, a liquid staking derivative, into Friktion Volt#01)
Friktion is powered by a best-price engine which captures the best options, futures, perpetuals, and spot pricing across on-chain exchanges (CLOB, AMM, OMM), off-chain market makers, and between Volts while keeping the protocol risk-neutral, meaning Friktion does not warehouse market risk.
Volts utilize the infrastructure below:
- Channel RFQ: Solana native Request-for-Quote auction system conducting blind Dutch auctions to connect Friktion Volts to show liquidity on Options and Spot trades. Powered by Serum.
- Inertia: European-style cash settled options primitive used by Friktion Volts#01 and #02. Put simply, Inertia allows Volt#01 depositors to earn returns (PnL) in underlying asset (ie SOL) and Volt#02 depositors to earn returns (PnL) in USDC.
Passive investors and liquidity providers: Automated portfolio management to generate returns across market cycles. Input a portfolio of spot, perps, LP positions, and deploy models to determine how to protect and better grow your assets.
Active traders: Deploy optionality (leverage without liquidations) to trade and earn through products like covered calls, protected puts, iron condors, and straddles on your favorite DeFi assets. Arbitrage mispricings between assets and their volatilities.
DAOs: Identify and manage the risks of your protocol and Treasury, enabling your team to focus on community building. Better incentivize long-term contributors through Custom Liquidity Mining.
Last modified 3mo ago