Fintech platform COTI revamped the Crypto Volatility Index (CVI) to offer a set of new features including USDC support for staking.
- The gauge is designed to indicate the level of implied volatility in the crypto market through a decentralized index from crypto options prices. It is similar to the VIX volatility index, often called the fear index, on the S&P 500.
- "A challenge is the creation of a platform and ecosystem to trade the index," a COTI spokesperson told CoinDesk. "The problem here is what works for the VIX cannot work for crypto markets, since the market would always be off balance and illiquid. We solved this by creating an AMM [automated market maker] and [self-adjusting] volatility tokens."
- Staking is fundamental to how the index works because users must be incentivized to make it work, the spokesperson told CoinDesk.
- With the enhancement, users can open USDC positions and stake CVI USDC through the index, an emailed announcement Thursday said.
- Volatility tokens have also been introduced as part of CVI 2.0 to be used as a hedging tool by investors.
- The first such token is USDC-ETH, which can be be traded on all Ethereum-based decentralized exchanges.
- CVI 2.0 also includes margin trading on the Polygon network, allowing users to access greater sums of capital.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.