How Is CVX Different From Other Indexes ?

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By computing a volatility index (CVX) from cryptocurrency option prices, we analyze the market’s expectation of future volatility. Our method addresses the challenging liquidity environment of this young asset class and allows to extract stable market implied volatilities.

CVX is the first full-scale decentralized platform to bring this sophisticated and very popular “market fears index” to the crypto market. CVX is DeFi.

We have created CVX with great appreciation for any tools that can assist traders with analyzing the markets. With that in mind, in the following article we examine previous work in the space to the new CVX index and overview the differences between the implementations and methods.

CVX Volatility index — General Comparison

What is the difference between CVX and other platforms such as: LedgerX + T3, BVOL?

LedgerX is promoting a volatility index which will be part of their platform. The index is a centralized implementation. In addition, the turnover on the platform is low (without futures) so it can’t efficiently do market making as deribit and therefore can’t offer a reliable indicator for volatility. The only possible volatility index for the crypto markets must be a decentralized and dynamic volatility index which is not biased nor connected to a certain exchange.

The BVOL Token, similarly to ledgerX, is based on a centralized source (FTX exchange) and therefore cannot serve as a decentralized and reliable indicator.

As opposed to the above indexes, CVX is built to work well with all new and upcoming volatility indexes. Once the FTX BVOL or LedgerX index gains enough volume, it can be added to CVX index formula calculation as an additional data source. Since CVX offers a dynamically adjusted index which can rely on more than one source and it is not biased to a specific exchange or data.

In addition, the CVX implementation and protocol is fully decentralized and controlled by $CVX token holders and strongly incentivizes them to seek the optimal index formula. Any changes and additions are done under CVIP (Crypto volatility implementation proposal), which would include a voting period, and will not take immediate effect.

What is the difference between CVX and the “Fear and Greed index”?

The fear and greed index is a centralized index, which combines social media and search trends with price average calculations. As such, though very interesting to follow, it is very different to CVX. Currently it consists of a combination of calculations — including the ratio of current Bitcoin price to its latest average,volume, google search results and according to its recent publication will soon add reddit posts analysis. At present it does not rely on option pricing, which is the most relied upon indicator of volatility in traditional finance.

Summary Comparison

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CVI is a decentralized volatility index for the crypto space — powered by COTI network

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