- COTI has launched the first decentralized Crypto Volatility Index (CVI).
- With the mainnet launch, COTI also launches the GOVI token, the native governance token of the index.
COTI, an Israel-based blockchain startup today launched the cryptocurrency industry’s first decentralized Crypto Volatility Index (CVI). Designed as a counterpart to the traditional stock market volatility index, the CVI allows traders to profit from crypto market volatility. Accordingly, traders can open positions in both directions, using USDT.
Traders expecting an increase in volatility can open a CVI position, and skim profits by selling their position again. Conversely, traders can profit from low volatility by providing liquidity to the platform. If their position turns out to be correct, liquidity providers can collect fees from traders who have opened CVI positions.
Technically, the Crypto Volatility Index is created in kind by calculating a decentralized volatility index based on the Black Scholes option pricing model from cryptocurrency option prices along with market expectation analysis of future volatility. A press release shared with CNF further states:
CVI is created by computing a decentralized volatility index from cryptocurrency option prices. This is complemented by analyzing the market’s expectation of future volatility. When combined, this allows for implied volatilities to be calculated, enabling traders to profit from market volatility and to hedge against drawdowns that affect external positions they maintain.
It is also important for traders to know that liquidity providers must deposit USDT for at least 72 hours to be entitled to a share of the premiums collected from the pool. CVI traders, on the other hand, must hold their position for at least 6 hours before they can sell it.
For ease of use, the platform (httpss://cvi.finance/platform) can be connected to MetaMask or the trust wallet. To earn platform fees and participate in voting, users can also use GOVI, the index’s native governance token. GOVI holders can have a say in tradable assets, available leverage, deposit amounts, and platform fees, among other things. Liquidity providers using their LP tokens can also earn additional GOV.
Future upgrades are expected to add Ether (ETH) and COTI as deposit options. Furthermore, COTI also announced additional data sources for derivatives markets, an enhanced trader dashboard for experts, support for margin trading, and an improved voting platform.