Well that's pretty much the only reason. It seemed like a perfect fit to the equation we're trying to find. An incentive to raise volatility and, in turn, trading volume.

The way you're asking: Why wouldn't we want to use it?


Traders make the biggest gains (or losses) when volatility is way up in the sky. I don't see a reason why lenders should be left behind when "surf's up". Sure, they may convert their swap-USD into exchange-BTC and "ride that wave" along the traders, but that only increases your risk. I imagine the swap-market as being the "safe harbor" on the platform... Also, the lent-out money does "work more" during these times of high volatility and like in the real world: the more fish you get out of the sea the more you can sell. Damn, I start to think we're modern day's early fishermen, every damn metaphor fits so perfectly

The current swap-(side-)market is a bit too stressfull in my opinion, constantly re-shuffling, observing and adjusting rates and whatnot. A fixed-rate on the other hand would be as boring as your dusty old savings-account, don't you think? It lacks the feedback-loop, the incentive to inject volatility in the market, hell it could even infect the BTC-market with it's boringness (because feedback-loop), BTC might get glued to 400 like, for years... not that that would be too bad for the stability-fans but come on, a 5.5 year old should move, damned! Even if it's a currency.

A volatility-based swap rate just seems to be something not too boring and not too stressfull, the sweet spot in between.

For the rest of your "essay" I'm not sure I did follow through entirely but if I understand correctly you're saying a variable rate would be pretty bad in quickly falling markets, correct? If so, I don't see exactly why that would be the case, the swap-load factor would pull the rates back to a minimum even if the base swap rate goes way up high so... try again explaining it from a fisherman's perspective, that should do today