- Use Cases
The Crypto Volatility Index (CVI) is a decentralized VIX for crypto that allows users to efficiently trade market volatility without the directional risk of spot trading. Today we talk about the background of CVI and the recent V3 launch. Moshe and Yoni also chat about the technical protocol details behind CVI.
Welcome to the Amberdata Derivatives Podcast featuring CVI (Crypto Volatility Index), a DeFi VIX built on-chain. In this podcast, Greg Magadini host Mosha Cohen, CEO of CVI, and Yoni Neeman, CINO of CVI, discuss the recent release of CVI's fourth version, a tradable index for crypto volatility.
Mosha Cohen has been an entrepreneur for 12 years, with a background in internet entrepreneurship and ventures. Obsessed with crypto trading for the past three years. Became CEO of CVI in July, focusing on making it a significant tool for the crypto space.
Yoni Neeman has been in the crypto space since 2017, background as a software engineer with experience in algorithmic trading and risk management. Currently working on the architectural side of CVI.
Overview of CVI
CVI aims to be the VIX of the crypto market, offering a platform for trading against the implied volatility of Bitcoin and Ethereum options. The platform provides a complete ecosystem for trading volatility, featuring two indexes: CVI and UCVI (three times more volatile). Traders can open positions in real-time with leverage (up to 16x), and a short option is soon to be introduced.
Trading Suite of Products
CVI offers a range of products, including:
- CVI Index: Traders can go long on the index with leverage.
- Ultra CVI (Leverage Index): Three times more volatile than CVI, providing additional trading opportunities.
- Theta Vault: Liquidity pool where traders pay hourly funding fees, which go to Theta Vault depositors. Enables earning interest from trades.
The Hedge Theta Vault acts as a risk mitigation strategy, allowing the reduction of funding fees by 70%. Funding fees are now more lucrative for Traders, making it a more tradable platform. Shorting the index will be available soon, contributing to the further balancing of the funding mechanism.
Governance Token (GOVI)
- GOVI has various governance functionalities, enabling GOVI holders to vote on important decisions.
- Stakers will become eligible for real (protocol fees) when specific conditions are met.
- CVI's success is directly related to the benefits for GOVI holders.
The onboarding of market makers is currently limited to a close circle, but the plan is to expose short options to everyone, potentially leading to a more decentralized approach.
Technology and Scaling Solution
CVI currently operates on Arbitrum, chosen for its technological excellence. The roadmap includes expanding to other Layer 2 scaling solutions.
- Reintroduction of volatility tokens with low fees once Uniswap V4 becomes live.
- Exploration of high volatility environments with negative funding rates for shorts.
- Educational efforts to help the crypto community understand and trade implied volatility.
Tokenized Volatility Exposure
In previous versions, CVI introduced tokenized volatility exposure. These tokens were pegged to the CVI index and used a rebase mechanism to maintain the peg, allowing traders to arbitrage between the platform and decentralized exchanges.
Book Recommendations and Hobbies
Yoni Neeman recommends "Market Wizards" for insights into the minds of professional traders and also enjoys boulder climbing. Moshe Cohen has been reading options books lately and recommends his most recent read, "The Options Playbook", and also enjoys playing soccer outside of work.
CVI's journey from its inception to version four involved overcoming significant challenges. The platform continues to evolve, focusing on user experience, risk management, and educating the market on implied volatility trading. They are on the journey to the VIX of the crypto market. Join the CVI community for insights and updates on their mission to be a significant tool in the crypto space.
CVI Documentation: https://docs.cvi.finance/
AMBERDATA DISCLAIMER: The information provided in this research is for educational purposes only and is not investment or financial advice. Please do your own research before making any investment decisions. None of the information in this report constitutes or should be relied on as a suggestion, offer, or other solicitation to engage in or refrain from engaging, in any purchase, sale, or any other investment-related activity. Cryptocurrency investments are volatile and high-risk in nature. Don't invest more than what you can afford to lose.
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