New COTI tokens function as a VIX for crypto and Ethereum
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Fear and greed drive markets – especially in crypto. Now there’s a decentralised way to trade market sentiment and add exposure to crypto volatility to one’s portfolio.
The team behind the cryptocurrency COTI announced overnight it would be issuing volatility tokens known as ETHVOL and CVIVOL, pegged to volatility indexes for Ethereum and the overall crypto market.
The Crypto Volatility Index is basically a crypto version of the VIX, the Chicago Board Options Exchange index that uses option-market data to gauge the expected volatility of the S&P500 for the next 30 days.
The CVI does this for crypto, aiming to determine the market’s expectation of future volatility over the next 30 days.
It computes a decentralised volatility index using crypto options prices, returning a value of 0 to 200.
Professor Dan Galai, who co-created the original VIX, was involved in creating the CVI.
The Coti team says it would using Chainlink Keepers to automate the maintenance of the tokens and ensure they stay pegged to their indexes.
The Chainlink Keepers will automatically trigger a supply rebase of the volatility tokens at midnight UTC, ensuring they maintain their peg without requiring any manual input or centralised process.
Eevery time a rebase is triggered, users will receive more or less ETHVOL tokens directly in their wallet, based on the change from the previous rebase.
Rebases will be paid by funding fees, which then get distributed to users based on whether they have a long or short position during the rebase.
“Integrating Chainlink Keepers was a natural next step after using Chainlink Price Feeds to access high-quality options data used in the CVI volatility index calculation,” said Shahaf Bar-Geffen, CEO of COTI.
“Chainlink Keepers are reliable, decentralized, and seamless to integrate, ultimately offloading manual labour from our developers while still providing strong assurances that our volatility tokens stay pegged to the underlying CVI index.”