The AMA was held in the CryptoBanter Telegram group on March 1st, at 3:30pm UTC.
We were honored to be invited to the CryptoBanter telegram group for an amazing AMA.
The CryptoBanter team and community asked us amazing and very interesting questions, which Yair, our Head of BizDev, was more than happy to answer.
Crypto Banter:
Hello Yair, what an honor to have you here for our AMA with CVI The Crypto Volatility Index, can you tell us a bit more about you and your role in the project?
Yair:
Hi Guys! A pleasure to be here 👋
I’m Yair Testa. Head of BizDev here at CVI
I’ve been in CVI for around a year now, making sure we always bring new partners and explore different ways of how we can cooperate with leading DeFi protocols. My background is in Business and B2B sales/ partnerships.
Given our strong network and connections, we reached Prof. Dan Galai and started working together to bring this very popular index to the crypto space!
Crypto Banter:
Could you tell us in short what a Crypto Volatility Index is and when would the Banter Fam use it?
Yair:
Of course 🙂
In a nutshell, CVI is the market fear index for the crypto space.
The CVI index ranges between 0 and 200, and it tracks the 30-day implied volatility of Bitcoin and Ethereum
Now, for CVI to be popular and widely adopted and be used by all the Banter Fam, there should be also a platform that allows traders to easily trade the index and that’s the reason we launched the CVI platform and the volatility tokens!
Both the platform and the volatility tokens allow people to trade the expectations of the market for future volatility. So, trading the CVI Index is a great way to find profitable trading opportunities in the market without having to predict the direction of the price.
Traders make a profit on volatile markets (when the volatility index goes up) whether the prices of the actual tokens are going dramatically up or down.
Crypto Banter:
That sounds very interesting! And good to have this in Crypto :)
I did some research and I see there is a complete CVI Ecosystem, can you tell us more about it?
Yair:
Yeah, so as part of the CVI launch, we also introduced an innovative and full-scale decentralized ecosystem that includes; The CVI trading platform, Volatility tokens, and the $GOVI token.
As we mentioned before along with the CVI index, we have created a user-friendly and decentralized platform that allows traders to trade the index directly according to their belief in the market.
Here it goes a quick summary of how it works:
- Open a position in the platform if you believe volatility is about to increase, as a speculation or as a hedge for your portfolio.
- Provide liquidity to the platform f you believe the index value is about to decrease or remain stable (Liquidity Providers also earn a share of the platform fees collected from open positions)
- Earn $GOVI, the DAO token of CVI, on all of the above.
- Stake $GOVI to earn additional auto-compounding rewards and have voting rights in our community.
Recently, we launched our Volatility tokens (CVOL & ETHVOL), which allow anyone to take a long position on the index as simple as buying the token on a DEX! 🔥
The Volatility tokens are ETHVOL on Uniswap on mainnet, and CVOL on QuickSwap, on Polygon
All those trades generate fees that are used to buyback GOVI from the market, reducing the supply and distributing them to GOVI stakers, traders, and liquidity providers 🙂
Crypto Banter:
I love trading so this is getting my full attention now, thanks for the clear explanation.
As you mention CVI uses the $GOVI token, what is the use case of this token?
Yair:
Yair testa, [1 Mar 2022 at 17:49:32]:
So, the GOVI token is an ERC-20 token currently tradable in Ethereum mainnet and Polygon (soon also in Arbitrum 👀) and acts as the governance token for the CVI ecosystem I explained earlier
I believe we managed to do one of the fairest launches with the launch of GOVI (No pre-mined tokens, no VC or whales)
The initial supply was airdropped to over 3000 people, who claimed it over a period of several months. In addition, 60% of the distribution is done over time to the platform’s users — This also makes a lot of sense in our view, as who is better to control the platform and become its owners than its users who have a stake in the game.
As part of our Staking 2.0 — by staking their GOVI tokens on our platform, GOVI stakers earned auto-compounded rewards.
The longer to stake your tokens, the more the auto-compounding effect will be, and therefore, the bigger the amount of $GOVI rewards you will be receiving overtime
I would like to mention also that yesterday we released our first vote for our community to participate in the development of the platform as well!
Crypto Banter:
Nice
When we are talking about DeFi, security is an important topic. How do you protect the users of the CVI Ecosystem?
Yair:
It’s actually a very good question, we do take security very seriously and while we developed the platform during 2021 we conducted two different audits with very well-known firms, PeckShield and CERTIK.
We are also soon going to perform our third audit and the first one of 2022 very soon (I actually spoke again to them earlier today)
I believe being a year-old protocol and already performing 3 full-code audits shows our commitment to keeping the protocol secure for our users🔐
Crypto Banter:
Yeah this gives a good impression that you take things serious
Before we switch to the Community Questions I always like to get something extra, some inside information.
Can you give the Banter Fam a glimpse of the future? What can we expect from CVI in the short, mid, and long term?
Yair:
Fair enough, so a few months ago we actually released a bunch of very cool features to give major benefits to the new GOVI stakers, as well as to the long-term CVI supporters. Part of these new features includes the auto-compounding feature and the buyback program to reduce the token circulating supply I mentioned earlier among other things
In the upcoming future people can expect to see very interesting partnerships on the business side, as many protocols and publishers are very interested in showing in the CVI index data on their sites! 📊
Also, we have a lot of ideas to make additional improvements to the tokenomics and liquidity provision to the platform — but those improvements will be decided by a governance vote of our $GOVI holders (of course 🙂 )
Some of the ideas I refer to:
- A very useful Impermanent loss protection product 👀
- Released of leveraged volatility tokens
- Arbitrum chain
And so many other projects and features that are worth waiting for but we can’t disclose yet …
Crypto Banter:
CryptoGameNerd |Will Never DM First 🏄🏼♂️🚀🌕, [1 Mar 2022 at 18:01:35]:
Wow, thanks for sharing this with us!
Love the fact you give the holders the voting power!
Our Banter fam also has some good questions for you, so let me start with the first one:
Yair:
Of course! Voting power it’s essential if as a protocol we want to belong to the DeFi community!
And I have to say that our community has great ideas!
Crypto Banter:
CVI is a crypto volatility index, predicting volatility in BTC and ETH for the upcoming 30 days. Just in BTC and ETH?
How does The CVI index calculation mechanism work?
Yair:
Okay, so essentially the index is calculated based on a Black-Scholes option pricing model, which computes the implied volatility of cryptocurrency option prices together with analyzing the market’s expectation of future volatility.
To be able to implement the crypto volatility index, it is crucial to have an options exchange with rules, market makers, order books, and good turnover to provide reliable option prices. Volatility can’t be accurately calculated if we can’t be sure that there are no holes in the option chain. For this reason, one of the data sources we used for the CVI calculations is Deribit, which is the most advanced and widely adopted platform for derivatives and options, among other exchanges
Crypto Banter:
the second question, Crypto Volatility Index intends to build a complete ecosystem, so which part of the project is created for this ecosystem? What is the difference between Crypto Volatility Index and the Fear & Greed Index?
Yair:
So this picture is a good summary of all our current ecosystem — The CVI platform and AMM is at the core of the ecosystem, on top of which the other volatility products are built.
Regarding the difference between the indices
Each of them is a great tool for any crypto trader — The difference is that the input for the CVI calculation is actual market prices of options, similarly to the tried and tested methodology of the original market fear index of the stock market.
This allows anyone to get a gauge of the market’s expectations of volatility with a single number.
Crypto Banter:
Great questions so far from the Banter Fam and there are some more for you to answer Yair.
If CVI is to be used as a hedge against liquidation on a CEX, how is the CVI index price on the CEX protected against coordinated manipulation? It seems the time delay required for arbitrage to correct price deviations could be exploited to trigger liquidations.
Yair:
Up until today, we haven’t discussed in-depth how the arbitrage mechanism of the CVI volatility tokens works. We’ve taken a novel approach that we haven’t seen before in DeFi.
The time delay for arbitrage is designed to protect from front-running the CVI AMM. The volatility tokens (currently traded on dexes and later on dexes) are traded in the open market, which means any manipulation attempt has a strong anti-loop as it can be negated similarly to any other token — If the price is artificially reduced that will be a big arbitrage opportunity for everyone to correct while reaping the profits on the AMM side is always possible after the time delay.
Moreover, arbitrageurs who do not want to wait can shorten the delay by overpaying a bit on fees
This novel mechanism of arbitrage utilized by the volatility tokens works a bit similar to how flashbots works for MEV extraction on Ethereum — It creates a market that lets participants compete on who closes the arbitrage faster making it a very efficient market.
Crypto Banter:
When is the team coming out with leverage play on volatility index? No need for 50–100x which is too risky. 1–2x will be good enough to gain some traction.
Yair:
So regarding leverage, we already support taking positions with x2 leverage on the CVI platform.
In regards to leverage volatility tokens, I can confirm that we plan to release our leverage volatility tokens this year to add them as part of our ecosystem (sooner than later 🙄) — And maybe release our current volatility tokens in other chains as well..
Crypto Banter:
Again very impressive project! Thank you so much for your time and very clear answers Yair
For all of our updates and to join the conversation, be sure to check out CVI channels:
Website: https://cvi.finance
Whitepaper: https://cvi.finance/files/cvi-white-paper.pdf
Twitter: https://twitter.com/official_CVI
Telegram (group): https://t.me/cviofficial
Telegram (channel): https://t.me/cvichannel
Discord: https://discord.gg/48K9EupjqY
