GM!
The crypto market has always been known for its extreme volatility compared to traditional market. What if we could derive volatility and use it as a hedge in our portfolio?
Meet @official_CVI, which we will discuss further in this visual thread.
#DeFi #CVI #VIX
Table of Contents:
➡️ The Volatility
➡️ VIX
➡️ CVI
➡️ $CVI Ecosystem
➡️ Volatility Tokens - $CVI
➡️ Managing $CVI
➡️ Theta Vault
➡️ $esGOVI Phase
➡️ $esGOVI Distribution List
Disclaimer:
Before we move forward, please note that this thread merely aims to share our understanding of the topic and should not be taken as financial advice.
Disclosure:
This post is under a partnership with the @official_CVI team
Volatility defines trading. It measures price deviation from mean in both directions, indicating asset fluctuation.
It relates to perceived uncertainty and risk. Traders confidently perceive volatility as an exhilarating opportunity that enhances their strategies.
Volatility Index (VIX) gauges S&P500 options' implied volatility (IV), reflecting market sentiment.
Its elasticity and contrarian nature enhance portfolio outcomes amid expected volatility. VIX derivatives (futures or options) offer simplicity, cost-efficiency, and clarity.
Crypto Volatility Index (CVI) is a "market fear index" developed by COTI Labs, inspired by VIX.
CVI measures the 30-day implied volatility of Bitcoin ($BTC) and Ethereum ($ETH) using the Black-Scholes Model. It is an invaluable tool for traders who specialize in volatility.
For broader adoption, CVI innovates with a decentralized ecosystem:
1) CVI AMM
2) Volatility Tokens - $CVI
3) Theta Vault, and
4) $esGOVI token.
$CVI tracks volatility index, facilitating composable #DeFi integration.
$CVI, subject to time decay fees, may deviate from peg. To counter, $CVI employs elastic token supply with negative rebasing, gradually reducing amount while preserving relative value.
Two methods for $CVI positions:
1. CVI AMM: Native mint/burn, no price impact, but redemptions are time-based
2. DEXes: Instantaneous, but susceptible to fees, price impact, and slippage
➡️ $CVI's presence on both platforms generates arbitrage chances.
To ensure sustainable liquidity for volatility tokens on DEXs, a mechanism is needed to shield supplied $CVI from time decay.
The Theta Vault acts as the exclusive provider in DEX and CVI AMM pools, earning 100% of its revenues from both.
$esGOVI replaces $GOVI's emission model, implementing an escrowed reward system. Stake $esGOVI for protocol rewards or vest it for matured $GOVI.
Next phase allocates $esGOVI to Theta Vaults LPs and traders, offering yield, $USDC returns, and Hedging Point to protect LP
$esGOVI's objective is to align real yield with the protocol's success and progress.
To achieve this, CVI distributes emissions as follows::
• Stakers (60%)
• LPs (20%)
• Traders (20%)
References (Link in ALT)