Published
3 years ago on
January 19, 2021
Coti has just announced that its new Crypto Volatility Index had gone live on mainnet. The index is inspired by the existing Stock Market volatility index and will enable traders to open positions or contribute USDT liquidity.
The Stock market equivalent index, known as the VIX, measures how much volatility financial professionals think the S&P 500 will rise or fall over the following 30 days. So, it’s actually tracking the ‘options market’, where traders bet on future performance of assets.
COTI’s Crypto Volatility Index (CVI) will have a similar function whereby traders can open positions on the CVI if they think the volatility is going to increase. If they are correct then they can sell the positions when the CIV has risen (they do however have to maintain their position for at least 6 hours).
Contrariwise, if traders expect volatility to go down, they can supply liquidity to the CVI (USDT liquidity has to remain on the platform for at least 72 hours) and if they are right, they can receive fees from other traders who have open positions.
“CVI is created by computing a decentralized volatility index from cryptocurrency option prices. This is complemented by analyzing the market’s expectation of future volatility. When combined, this allows for implied volatilities to be calculated, enabling traders to profit from market volatility and to hedge against drawdowns that affect external positions they maintain.”
Traders can access the CVI platform through Metamask or Trust Wallet where they will be able to carry out all the aforementioned functions.
GOVI is the native governance token of the CVI and can be used by holders to stake and un-stake, earning fees and participating in voting. On the governance side of things, holders can vote for the assets they’d like to see traded on the CVI, and the amount of leverage that can be used, among other options.
Future additions to the platform will see the incorporation of both ETH and COTI as deposit tokens, which will add to USDT which is the only deposit token on the platform so far.
An advanced trader platform will also be added, together with support for margin trading, increased sources for derivatives market data, and an augmented voting platform.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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