A decentralised solution for the crypto market. Crypto Volatility Index works as a standard in order to track the unstable nature of crypto prices and the market too. The main explanation behind CVI was to enable people to fight against the market volatility and work upon the loss factor. Not only a full-scale decentralised ecosystem, but crypto volatility index are immensely popular market fear index in the crypto industry rising and why is bitcoin continually hitting new record.
The index works as a real-time market index representing the fluctuating and further market expectations for the next 30 days. Another major thing about the crypto volatility index is – it was developed by COTI and launched on the Ethereum MainNet on 20 January 2021. COTI collaborated with Dan Galai, A professor and creator of VIX for launching CVI. It refers to a project which enabled the development of this amazing technology, Coti also developed a decentralised trading mechanism that allows entering long and short index positions without the need of permission.
Protecting people against impermanent loss and market fluctuation, the crypto volatility index is one of its kind of decentralised mechanisms that provides cultivated methods and the market fear index into the rising market of cryptocurrency. Formed by computing the index from the options process, it is then analysed with respect to the market expectations of upcoming fluctuation.
CVI refers to a decentralised VIX for crypto users. VIX means an index that calculates the buoyancy of the stock market through implied volatility of S&P 500 index options. Also known as the “Market fear Index”, CVI tracks Ether and Bitcoin and trades the volatility for the next 30 days. This is done through the Black-Scholes options pricing model to promote an index fluctuating between 0 and 200. The model is used in order to determine the value or price based on the following variables –
the six variables are –
- type of option
- underlying stock price
- strike price
- risk-free rate
Governed by the $GOVI tokens, The CVI projects allow token holders to vote on concerns such as leverage use, deposit use, platform fees and tradable assets. As the project was created by the COTI team, initially the holders were the primary gainers from the GOVI airdrop, but the case is not the same now. Holders can collect their platform fees through token staking.
Apart from this, A Chain-link powered decentralised visionary network is used by CVI in order to find out the average data from multiple chain sources in the market and deliver it on the chain. For maximising transparency, Chainlink architectures believe in using distinct oracles through external adapters. This allows gathering different trading options data from the market and calculated CVI. Deribit exchange acts as the main source of data for calculations by CVI because of its advanced and broad platforms.
In order to gather in-depth information about the role and importance of these volatility tokens, it is crucial to understand the meaning of the word “volatility” with respect to the crypto industry. The measure of how much an asset’s price has increased or decreased in a particular period of time is termed volatility. These assets also hold the power to produce extraordinary returns or even severe losses in a short period of time.
CVI, as mentioned developed by COTI in partnership with Dan Galai, is intended to enable investors to understand the trade and the highly volatile nature of these digital assets. This allows them to trade smartly and analyse the market position in the coming time, with this investors can get a fair idea of their invested assets and their position in the market.
This decentralised version of the VIX enables potential investors to fight against buoyancy and trade smartly, decreasing the rate of impermanent losses.
CVI is another great launch in the crypto industry broadening and amplifying the bitcoin era. For that purpose visit Bitcoin System. As blockchain technology is rising with the generational advancement, stronger and broader tools are emerging into the sector, enabling users and investors to trade effectively and utilise the market to its full potential. Cryptocurrency is a decentralised digital asset that will continue to grow in the near future.