Welcome to the CVI pre v4 AMA and thank you all for joining us today!
My name is Bar. I am more than happy to be the host of this AMA. I am here with Moshe our CEO and Yoni, our Chief Innovation Officer and Architect.
So let’s begin with the first question: wen marketing? what are the plans to support the launch and growth of CVI?
Moshe: Marketing has already started by building the plan and the necessary relationships. Obviously it makes zero sense to initiate our plans in a bear market and before the launch of V4. We are going to support the launch of the new version in various areas -
1. Influencers — we are already in touch with many of them, joining them as ambassadors of the project. All of them have relevancy for different focal points such as traders, education of the market, token traders, Liquidity providers and so on.
2. Partnerships — we are in touch with several companies, each with expertise in different areas. Our goal here is to bring significant players to our game. Whether it is on the OI side, Liquidity or brand awareness of CVI. We will of course announce when the appropriate time comes.
3. Our internal marketing and biz dev — we have a full time team working on all those aspects, crafting the right content, building relationships and supporting our users and community.
4. Incentive programs — we will announce this in a more formal way, but there will be programs to incentive traders, liquidity providers and affiliates.
Let’s continue to the next question by our dear Full Throttle Aristotle: v4 incoming, what is the primary difference in previous marketing efforts and this new campaign in terms of messaging. Are there key concepts of the marketing plan that can be shared amongst us? Anything unique about our approach?
Moshe: I think that a lot of what we are changing now in the product will reflect on the marketing as well. We aim to be more approachable, agile and fast, to be able to develop features and products that people need — quickly and efficiently. On the marketing front we have gained enough experience and connections to be using them now in a more efficient way.
CVI is undervalued, that’s a fact.
We are collaborating with a lot of different influencers and companies to bring this message to the front. We are taking a very proactive approach, in contrast to different market conditions in the past, it is not enough to be unique or with superior tech, you have to possess the right strategy and to think ahead of the game.
One more thing, in terms of marketing we will be relying on you all as well. The referral program will launch alongside the new version, so promoting CVI will also benefit our valued community.
The next question is by Jvol: What does the marketing strategy entail? Which audience are you targeting? Institutions or regular traders?
Bar: In the new version, we focused on two main objectives. Firstly, we aimed to simplify the user experience and make the trading process more intuitive. Secondly, we wanted to scale up and offer users more opportunities to engage with the platform for potential profit, introducing features like 16x leverage, a new leveraged index, and a reduced funding fee. These enhancements will make the CVI appealing to a wider audience, including day/swing traders, degens, DeFi enthusiasts, LPs, and even institutions. So, in response to your question, we will target both.
And i will take the next question as well, by our user Aro: Is it possible to get our index chart embedded into some analytics page for more to see and use?
Bar: Of course, the CVI is already featured on several websites, including https://www.investing.com/indices/crypto-volatility-index-chart As we continue to grow, more platforms are expressing interest in collaborating with us. I am confident that in the near future, we will see our Index featured on additional analytics pages. Speaking of analytics, I can share that we are developing a new Dune for our CVI v4.
We have another one by Jvol: Any plans to try and integrate CVI with known CEX’s?
Moshe: It’s always on the table and in discussions. While at this point additional exchanges will bring less focus, more risk and not the necessary added value — there will be a point when GOVI will be listed on the biggest ones.
Totally agree, thanks Moshe, here’s one we didn’t hear in a long time, by Wen Moon:
Moshe: Technically, UCVI is already available. You can switch and watch it using the top left corner of the graph. As for its full features functionality, the audit of v4 is expected to conclude this week, and we intend to launch shortly after.
And he also asked Wen Marketing?
Moshe: Marketing stretches on so many areas, each of them will be initiated at the right moment. Though I cannot expose all of the details, you will see for yourself. CVI is going to skyrocket and we are all part of it.
Thanks Moshe, we have another one by Jvol: What are the next steps when the launch of CVI V4 had been finalized?
Moshe: Great question, we see CVI v4 as a starting point rather than a finish.
Many great ideas are currently being discussed and we will present our next steps in the 2024 roadmap. Though I’m unable to expose specific details on the current discussions, I can say that CVI will not only be around implied volatility trading, but rather much more DeFi and volatility related products that will hopefully shape the future of our industry.
Next one by Tim — ×COTI L’Chaim-
Will there be tutorials made to show how to use it? Show your product, explain HOW to use it and WHAT it can bring me
Bar: Yes, tutorials are indeed on the way. Instead of producing these tutorials ourselves, we’re engaging with KOLs to collaborate on them. This strategy will serve a dual purpose: educating both their audience and ours on how to utilize the CVI and the most effective strategies to implement while using it, as well as tapping into a new user base.
Regarding your other questions, from time to time we share potential ways to profit from the CVI and its movements. I recommend not only following the Official CVI on “X” but also checking out https://twitter.com/moizcohen , who shares occasional insights and alpha.
OK next one by K P HEMRAJ:
Recently heard about CVI , was looking at the formula, I didn’t understand even a little. It would be better if you provide the info of all chainlink feeds you use for each variable so that , even a layman can calculate himself and know what happens when the things go as they want
Yoni: The code for calculating the CVI is open source and can be found in Chainlink’s external adapters repository on github.
So it’s possible for anyone to download their repository and run the CVI calculation.
You don’t need to have expertise with options trading to run it and calculate it
I would still suggest anyone playing around with it to first understand basic options terminology
A list of several terms that you should be familiar with: You should understand the difference between call options and put options, know what a strike price is and what expiration time means
Now assuming you already know the terminology, a quick explanation of what CVI does in short:
It fetches the prices of options on Bitcoin and Ethereum, for out of the money strikes and for expirations near 30 days ahead. From those prices it reverse-calculates the black scholes formula to arrive at the CVI number.
The CVI number itself allows you to know the crypto market’s expectations of volatility for the next 30 days, with one single number. So this can help understand what the code itself does and its meaning.
Next Q by degeneratoor — What kind of discussions were had with volatility traders, what pain points did you identify and solve?
Moshe: We had deep conversations with traders from all across the industry. We tried to really identify their concerns with V3. We concluded the following as challenges for them -
1. Simplicity/UX/UI — the fact that you need to ‘mint’/’burn’ is a barrier and waiting between 20–60 min to get your position, is a HUGE barrier. This is solved with the new version thanks to a low latency oracle solution, there won’t be mint and burn and you will be able to open/close position in real time.
2. Max Funding Fee today is 3.5%, the hedging solution will reduce it by more than 50%. If CVI goes beyond its lower level, this will reduce even further. This kind of FF level is by far more attractive, and we have been discussing it with potential (big) traders.
3. Capital Efficiency — This is a must have for every Crypto-trading project. This version will include a 16X leverage.
4. The market is not volatile enough — we heard it too many times and UCVI is the answer, a 3 times more volatile graph. I urge you, go to cvi.finance , switch to UCVI graph, add Candles view and see for yourself, there are so many opportunities.
Now combine this with a 16X leverage you will get a 48X exposure, this is huge.
Next question: We haven’t seen any information on the inner workings of the hedging vault so how does it work and what’s the impact on the funding fee rates?
Yoni: Yeah the hedging vault is one of the most important features of CVI v4.
The new version has been our biggest yet in terms of development, with all the new features including leverage and UCVI, Uniswap v3, real time trading, all those took a lot of our focus. Now we’re in a stage where the code has been battle tested internally and the audit is near completion so we’re working on rounding up all of the information ahead of the release.
First let me recap what the hedging vault is:
It’s a new upgraded vault, on top of the existing theta vault, which automatically adjusts itself to balance its exposure.
The problem of unbalanced exposure is not related only to CVI. Whenever you have a peer-to-pool dex, such as GMX for example, there are situations in which exposure becomes one-sided. For example, if there are many short position takers, then the pool becomes exposed to down-side market risk
In the case of CVI, up until now, the mechanism to handle risk was a combination of caps on open interest and a higher funding rate. Now if you remember, up until a month ago, we’ve been in an all time low implied volatility environment. Without having the ability to hedge exposure, the funding rate had to be kept high to account for the possibility of a spike up, which eventually came a month ago.
So, how does the hedging vault work:
It’s a new vault that encompasses the original theta vault and includes alongside it an additional liquidity pool, which is an Inverse platform. This inverse platform allows opening leveraged short positions on CVI !
Whenever a new position is opened on CVI, the vault adjusts itself and adds liquidity to the inverse platform, thus allowing leveraged short positions to counter the upside risk of long open positions
At first stage, on launch, the inverse platform will be open only to market makers, later on it can be opened to regular users through the UI
This solution can allow the positions to scale up without increasing risk. This means that the funding rate can be reduced as in case of a spike in CVI, the exposure of the vault is balanced against the inverse platform.
Next one by our friendly neighborhood Aussie-
Are you implementing any Account abstraction strategies soon with the new features coming?
Yoni: Account abstraction is a game-changer for crypto and for DeFi, which is the reason we released our zkNFT a while back in order to promote its narrative
There are many teams working on AA, so we can definitely integrate with existing solutions once they are available. In the last few months all focus has been on CVI v4, but there are many ideas that we want to head to next.
It’s more likely AA features can be integrated with CVI next year in 2024.
Next question by Michiel- Will it in the future be possible for CVI traders to open and close a position with API?
Yoni: First, from what we’ve been seeing, it seems that some community members already have bots active and trading on CVI for quite a while. I’m not sure who they are, but you can try to reach out in the channels and find what they built. I strongly suggest to just be careful and don’t trust users you don’t know and to review any code that you run.
From the team side — I assume what you’re referring to is the ability to open/close with an sdk via code and not a backend. So currently there isn’t an open source CVI sdk, but we would like to release a lightweight version of our internal tooling, that is part of the CVI frontend code, which makes it easy for anyone to open/close by code. It just requires dev work in order to separate it from the rest of the code, while all hands on deck have been on releasing the new v4. So definitely that’s something that can be possible later after releasing the new version.
When do you estimate a ZK launch with the new features you’re about to implement?
Yoni: So first it’s my understanding Uniswap v3 has finally been deployed on zkSync (via Oku) which is great news for CVI, as we’re integrated with Uniswap v3 via the theta vault, which makes it a prerequisite to launch.
Right now the focus is on releasing CVI v4 on Arbitrum and rapid expansion on Arbitrum.
The timing on zkSync launch depends on some internal tooling improvements that zkSync are working on.
The way our dev team works is — they fork and create a local copy of a chain and run all tests on it. With zkSync it’s currently not supported, which makes it harder for us to battle-test the code. That’s important to us since there could be small differences between the evm on zkSync vs other chains. But solutions to that should be coming and will allow us to safely deploy CVI there.
Next Q we have another one by degeneratoor- Why did v3 “fail” to find PMF and why will v4 succeed?
Yoni: V3 had a great initial launch, the vault reached its cap on open positions 3 times in the first 2 months while APR spiked to 50%, then we entered an all-time ultra low implied vol environment for a very long duration. That created a problem with risk management as funding rates had to be kept high, which made long positions not economically worth it.
This is what the hedging vault solves.
In addition, having leverage is a MUST HAVE these days, so not only did we add that but with x16 and the new UCVI index, those make opening positions a much better deal for traders.
And another one by degeneratoor — Traders complained that funding fees for v3 were high. How do you determine that v4 funding fees will be competitive with the market? What is the threshold?
Yoni: First as you can see, CVI just spiked recently by quite a lot, so basic calculation can show that a funding fee which is around 50–70% would have been a great deal for traders.
It’s important to remember that the funding rate in CVI depends on the CVI index value and we’re now in a different vol. environment than we were a few months back, while the market became much more volatile.
On one side it means the upside from an incoming spike could be lower, on the other hand every few days we have a nice daily run-up in CVI. So that also makes our new index, the Ultra CVI, which is x3 more volatile, a really great tool for traders seeking to hedge for short term durations
*Combined questions* degeneratoor & aro
Q: What kind of integrations do you think are now possible with the new version of CVI?
Q: How’s the factor Dao/ lyra integration going?
Yoni: First, the hedging vault, as an in-house hedging solution, is important as it doesn’t create a dependency on another protocol.
We’ve seen in the past that creating a strict dependency can create a problem with value accrual for protocols.
In terms of integration there is no requirement to integrate with other protocols for CVI to work perfectly, due to having an internal hedging solution.
That being said, it would be great to integrate in order to have full on-chain hedging.
Before having the hedging vault, what we’ve seen when discussing the integrations is that they would require much dev time for integrating protocol. Thanks to the hedging vault, the process can be shorter, so we’ll be pushing it back forward after the release of v4
What is the value prop for CVI v4 that sets it apart from other solutions that will drive demand for the product?
Moshe: I believe this was answered in previous questions. The main points we solved should increase the demand for the product. While it had other benefits and goals we achieved with, the previous version was not lucrative enough for traders.
Does the team think that the features in the first release of v4 will be enough to eventually enable real yields? Or is it more likely that additional 2024 roadmap enhancements would be required to get us to that point?
Moshe: Yes of course, V4 is the version where we should enable Real Yields. You already know the conditions and we are working on getting them fulfilled.
What will be the benefit of the NFT?
Bar: Well I can’t reveal the details before they are fully finalized, but what I can tell you is that the NFT will be connected directly to the platform user experience.
What is the incentive for marketmakers to provide liquidity to the hedging vault ?
Yoni: In the case of the inverse platform, leveraged short position takers receive the funding instead of paying it,
so that’s their upside (in addition to downside movements in the index).
This means MMs who take leveraged short receive funding, on the other hand they have to hedge their exposure.
They can hedge it anywhere else they like. For example, they can take long positions via strategies such as strangles on a dex such as LYRA or on centralized exchange.
Market makers profit from the difference between the funding they receive and the success of their hedging.
The key with the inverse platform is that it has to be highly capital efficient for market makers, this is why leveraged short is supported.
That can allow a nice profit for mms, while still having high profitability for the theta vault in addition to balanced exposure, which allows much higher OI -> higher revenue even with lower funding rates.
Any chance KuCoin will re-list if we do enough DEX volume after the v4 release ?
Moshe: Yes. I can tell you that we are in discussions with several exchanges. As said previously, while it is not the first priority right now for various reasons, it has a lot of value and we will get ourselves listed on the main exchanges.
Can we get a sneak peak of the new platform 👀
And Moshe did it again!
Thank you very much guys, it was a pleasure hosting you, and thank you for those informative answers.
The AMA recap will be uploaded to our medium channel for anyone who missed it or wants to catch up.
Thanks, stay tuned and See you soon!
We would like to invite everyone to join our vibrant community on our social channels. If you have any questions, our team & community are always on stand-by and eager to assist.
v3 Litepaper: https://cvi.finance/files/CVI.v3.Litepaper.pdf
Telegram (group): https://t.me/cviofficial
Telegram (channel): https://t.me/cvichannel