Written by: Viktor DeFi

Compiled by: TechFlow

Finally, you don’t have to worry about cryptocurrency volatility anymore. Instead, you can now bet on that volatility to get the most gains, or even make good profits from other people betting on volatility.

This post tells you how to leverage CVI — a new DeFi primitive.

Built on Ethereum, Polygon, and Arbitrum, CVI is a decentralized cryptocurrency VIX that enables users to hedge against volatility in the crypto markets.

Essentially, CVI introduces a “market fear index” to the cryptocurrency industry with the goal of enabling users to:

  • Analyzing the volatility of cryptocurrencies

  • Hedge their portfolio

  • Earn money as a liquidity provider

CVI was established by COTI Network in collaboration with Professor Dan Galai, founder of VIX.

How does it work?

The platform tracks 30-day implied volatility for Bitcoin and Ethereum on a scale between 0 and 200. It uses the Black-Scholes option pricing model to calculate the implied volatility (put/call) of cryptocurrency option prices.

The platform aggregates off-chain data and contracts from multiple data providers through Chainlink nodes. In addition, CVI uses Deribit as one of its main data calculation sources.

Betting on volatility

Volatility trading is one of the main ways to earn income through CVI. The platform's token is $CVOL, which can be minted on DEX.

Traders can mint or burn $CVOL after a delay of approximately 20-60 minutes.

Funding fees are calculated based on the CVI index every hour. This means that the higher the CVI value, the lower the percentage of fees. These funding fees are paid by traders who mint volatility tokens.

Theta Vault

Theta Vault was launched in November 2022 to provide a sustainable source of liquidity for CVI tokens. Here, users can deposit USDC and earn income from swap fees, arbitrage fees, minting fees, trader profits and losses, and funding fees.

Token Economics

$GOVI is the governance token of the CVI platform. The total supply of this token is 32 million, of which the initial supply is airdropped to COTI native holders on Uniswap and LPs of the COTI-ETH pool.

Importantly, 85% of platform fees will be used to buy back $GOVI tokens from the market. Finally, the tokens will be distributed as staking rewards to CVI traders, LPs, and $GOVI stakers.

It’s worth noting that $GOVI has been performing well among low-cap coins lately, and with no signs of slowing down, the future looks bright for CVI.

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