CVI AMA Recap — Crypto Volatility Tokens(ETHVOL and CVOL)
The AMA was held in the CVI Telegram group on December 8th, at 2pm UTC.
Hello dear CVI community,
Thank you for being with us today for this AMA!
We thought it was the perfect time for a small AMA as we recently launched the Volatility Tokens(ETHVOL and CVOL).
We saw many of you had questions regarding it and we will be happy to answer them.
The team members that are going to be with us today for this AMA are Yoni Neeman and Costa Chervotkin.
I am sure you already know them but just in case…. guys, please introduce yourselves :)
I’m Yoni, COTI’s Chief innovation officer and leading the development of the CVI.
Very happy to be here today with you to discuss the newly launched Volatility tokens.
Hey, I’m Costa, CVI product manager, happy to be here to answer some more questions:)
Ok team, we are ready to go!
Feel free to ask all of your questions and LET’S GO‼️
First of all, amazing work!
Could you please explain to me better what’s the main difference between trading volatility in the platform and trading volatility with the tokens?
Sure, the tokens add a layer of composability on top of the existing platform. When trading directly on the platform the position is connected directly to your account, while trading the tokens allows you to simply swap from USDC to the token on a dex if you think volatility will increase, then swap the tokens back to USDC if you think it’s about to decrease.
They provide the ability to trade volatility as simple as trading any token on a dex.
I understand, yeah.
Can you please explain to us in simple words the process of minting a Volatility token?
The process has two stages — first you select a time in which you will mint the tokens, then you mint them at the time you stated (Fulfill your mint). To keep it simple, it’s advised for users to try first with a small amount and be ready to act in the time they selected (there is a timer showing you how much time is left until you should act).
Will the volatility tokens be tradeable with other assets than USDC in the future?
The tokens are going to be paired with USDC on dexes, but we are working on adding the ability to mint them with any stable coin, including DAI & USDT.
Despite the fact that you have brought a fantastic product to the market, the price has been dropping for months. How are you going to handle this?
Now that we have accomplished such a major milestone, the next thing that we are going to focus on is the update of the tokenomics which GOVI holders, I’m sure, are going to like+ with more marketing and CEX listing.
Cex listingS you mean right? Plural.
Due to liquidity providers for the volatility tokens now also receiving GOVI as rewards.. this will inevitably bring even more selling pressure to the token! Does the team feel that upon the release of the updated tokenomics, things will improve from a GOVI holders perspective? And can you give a timeframe of when we can expect these much needed tokenomics changes :)
Absolutely, we are already working on it and it is expected to go live in the upcoming 1–2 weeks.
I found the new EthVol very complicated. There needs to be a click here to do this & click there to do that so we can follow the process without so much confusion.
Well, you do not need to do the minting/burning to get the token, the easiest way is to buy them on DEXes and stake to earn GOVI.
The minting & burning arbitrage looks quite complex (even after reading the docs). Is this arbitrage mechanism meant for more advanced users or is it worthwhile for regular traders to take part into this?
If it’s the latter, could the team create some explanatory video (for dummies) with some examples on when you would arbitrage and how to do it?
First, it’s been great to see users have already started to mint, trade the tokens and close the arbitrage this fast after launch.
I would say that there is no requirement from any user to take part in the minting/burning, the free market should utilize these abilities to close the arbitrage between the platform and dexes.
So for regular users, it’s possible to simply trade the tokens on a dex, swap into them if you think volatility will increase.
That being said, minting/burning opens up a world of possibilities for users, so it’s definitely worthwhile for anyone who is interested to try it out.
We will definitely be adding examples and I’ve also seen users have started to discuss different possibilities here in the group, which is really great to see.
Is the Funding fee somehow reflected in the CVOL token?
Yes, same as with an open position, you are paying a funding fee and the value of the VOL token will decrease over time.
so one day cVOL will be near 0, only with a huge supply.
The volatility tokens will always keep their peg with the index., this is a key part of the unique technology behind them.
The tokens are “Rebase tokens”, which means their supply is elastic and adjusts according to the index price.
Over time, the amount of tokens each user holds decreases to account for funding fees.
In our view, this is the only possible way to create a token for a range-bound asset — and it’s a key element unique for the CVI volatility tokens.
Oh okay, thanks. It’s pretty cool that the CVOL token price is pegged to the actual CVI value.
How often do you decrease the token amount and how can you Access the Wallets of the CVOL hodlers to decrease the token amount?
The underlying technology of Elastic tokens originated with the Ampleforth project (AMPL), we’ve adapted it to our volatility tokens, which I believe are the first in the world to apply it to solve the tradability of a range-bound asset. The rebase action which adjusts the supply is called in a decentralized way by Chainlink Keepers, which calls the Rebase action at 0:00 UTC every 1–2 days. It’s important to note that the rebase has no effect on the actual value of the token — It’s purely semantic, as the price of the token automatically goes up in the dex when its supply goes down
With token decrease over time, what are incentives for people to provide liquidity to cvivol / usdc once Govi rewards dry up?
Do the Quickswap trading fees cover the loss of token value?
Great question! As the tokens were built to be the crypto equivalent of the hugely popular VIX ETNs, they are our reference.
These ETNs have a uniquely high volume in comparison to their AUM. In the case of the CVI volatility tokens — The more volume, the more fees for LPs of CVOL-USDC / ETHVOL-USDC.
To add to this — It can be expected that the more volatility there is -> the more volume we’ll see in the volatility token pairs -> the more fees to LPs of the volatility tokens and to GOVI stakers. The GOVI rewards are solely meant for early adopters and are not a necessity in terms of long term incentives.
Excluding the rewards, what would be expected is that during times of low volatility, the liquidity of the pairs would be lower (as in those times lps have a direct long exposure without the hedge of fees), while during times of volatility the liquidity of the pairs would expand rapidly — Which is a quite desirable result, as liquidity is more in demand during times of volatility.
Can the USDC & VOL token metrics be added to the analytics page (https://dune.xyz/govidev/CVI)?
Yes, the USDC will be added first, as dune already indexed our contracts. The volatility tokens metrics will be added soon after.
All of the metrics in the dune dashboard will be also updated to better display the data following the migration from USDT -> USDC.
How will you guys ensure to grow platform usage and TVL?
It seems CVI has a pretty steep learning curve for most crypto investors which makes me wonder what your target audience is.
Now that we have finished many of the features we had planned before the end of the year (Improvements in the AMM of the platform, ETHVI Index, Volatility Tokens in both Ethereum and Polygon networks) we are most certainly putting efforts within the marketing, platform awareness, tutorials, explanatory videos, etc.
We are working with many protocols and off chain trading platforms out there throughout different partnerships and collaborations to interact with their communities, speak about CVI, and invite traders (whether they are advanced or beginners) to use CVI.
You can expect partnerships announcements starting to come up within the next couple of days 🙂
Ok team, It is now time to end this AMA.
Thank you all for your participation and for bringing up such good questions!
Thanks a lot to @Costacher @Yoni_n 🙏
We will soon publish the AMA recap.