The young cryptoeconomy has earned a reputation for volatility, but now DeFi is marching forward with powerful new services for directly capitalizing on volatility. One such service that’s a must-track in this vertical right now is the rising Crypto Volatility Index project.
The Crypto Volatility Index’s flagship release is the CVI, a decentralized “market fear index” for DeFi that functions like the VIX does for TradFi. Developed by the COTI team in collaboration with VIX creator Prof. Dan Galai and governed by GOVI token holders, the CVI is a novel “money lego” for understanding, trading, and hedging against crypto volatility.
Better yet? Thanks to the new CVI V2 protocol release, making the most of this volatility is now simpler than ever!
Inside the Revamped CVI V2 System
At its core, the CVI protocol helps users track and trade the 30-day implied volatility of ether (ETH) and bitcoin (BTC) via the CVI Index, which uses the Black-Scholes options pricing model to foster an index that fluctuates between 0 and 200.
The CVI V1 system performed well, particularly during the acute DeFi market drawdown a few months back. The new-and-improved V2 system has evolved from that robust foundation and now provides an even more performative and user-friendly dapp for DeFi volatility traders.
So what’s new with V2, exactly? First off the protocol’s been deployed to both the Ethereum and Polygon mainnets, meaning traders can enjoy near-instant and near-free transactions on the latter’s sidechain as needed.
Speaking of Polygon, CVI’s V2 deployment on the sidechain launched with a new USDC platform that allows users to trade the CVI with the cryptoeconomy’s second-largest stablecoin by market cap. The USDC platform is also the first to support the CVI V2 system’s new margin trading capabilities, which lets leverage up to 2x (and later further) your CVI positions.
Another major new addition to CVI V2 is volatility tokens, with the protocol’s first being ETHVOL and next up CVIVOL. These tokens, which are adjusted via funding fees and rebased to maintain their pegs, give DeFi traders an unprecedented way to trade volatility tokens. These are the first volatility tokens that can be traded on margin in the ecosystem, and notably CVI V2’s different leveraged tokens (e.g. ETHVOL-X2 and ETHVOL-X3) can be supported within the same AMM liquidity pool.
Additionally, the CVI V2 user interface (UI) and user experience (UX) revamp will ensure investors can navigate and easily trade through the app. The protocol’s lockups and rewards systems have also been updated to shrink liquidity providers’ (LPs) lockup period to 48 hours and to launch dynamic rewards for CVI traders.
How to use CVI
Currently there are four distinct ways to use CVI V2. They are:
- Trading the CVI “crypto fear index” with ETH or USDT on the Ethereum mainnet or with USDT or USDC on Polygon.
- Providing liquidity to CVI’s key trading pairs, e.g. the Uniswap V2 CVI-ETH pool.
- Staking your CVI LP tokens to yield farm GOVI, the governance token of the CVI project.
- Arbitraging the CVI Index by minting through the protocol and selling the ensuing tokens on secondary marketplaces, i.e. decentralized exchanges.
If you’re keen on trading into the CVI, head over to cvi.finance and you’ll arrive at the dapp’s Ethereum “Trade” dashboard. Select the crypto you want to invest with or toggle over to the Polygon network and do the same. Input the amount you want to invest, press “Buy,” and then confirm the purchase with a transaction!
The CVI trading sidebar.
If you want to LP in service to the CVI ecosystem, go to cvi.finance and press the “Provide Liquidity” button. Choose the network and then the currency you’d like to supply, input the amount of crypto you want to deposit, and then press “Buy.” Confirm the ensuing transaction and you’ll be providing liquidity! Note: CVI is distributing GOVI rewards to traders and LPs who maintain their positions for at least 48 hours.
The CVI LP sidebar.
If you want to stake with your CVI LP tokens to earn GOVI token rewards, navigate to the CVI V2 “Staking” dashboard, find your pair of choice, and then select “Stake.” Next input the amount of LP tokens you want to stake (most choose 100%) and then confirm the deposit with a transaction. You can keep track of your accruing GOVI rewards and withdraw your tokens through the same interface you just used!
Keep CVI on your radar
CVI V2’s volatility products are already powerful, and the innovation is only beginning.
CVI may have been the first dapp to roll out margin trading around volatility tokens, but there’s no time for complacency as more assets, more features, and more money legos are on the way. In the meantime, keep up to date with CVI’s progress by following the project on Twitter and Discord.
Disclosure: This post is part of our paid promotional DeFi Pulse Drops series; We’ve partnered with CVI to help educate and inform the community about the CVI ecosystem. As always, we’re committed to providing the entire community with quality, objective information, and any opinions we express are our own.