The Crypto Volatility Index Integrates Chainlink Keepers to Automate Rebasing of the CVI Volatility Tokens
The Crypto Volatility Index (CVI) is excited to announce that we have integrated Chainlink Keepers to automate the maintenance of tokens pegged to our Volatility indices Specifically, Chainlink Keepers will automatically trigger a supply rebase of our Volatility tokens, every day at midnight UTC time to help ensure it consistently maintains its peg without requiring any manual input or centralized processes.
We decided to integrate Chainlink Keepers because it is a decentralized network run by the same time-tested and professional DevOps teams powering Chainlink Price Feeds, which help secure tens of billions of dollars in value for hundreds of applications across numerous blockchains. Chainlink Keepers are optimized for low costs and decentralized security to avoid single points of failure, making it an ideal trust-minimized solution to keep the Volatility tokens reflective of current market volatility.
Creating a Decentralized and Fully Automated Volatility Token Using Chainlink Keepers
The Crypto Volatility Index (CVI) is a VIX for crypto, created by the COTI team in order to create a “market fear index” for the crypto market. CVI is backed by extensive research and development by industry experts in financial markets, including the original VIX creator contributing as part of our research team. CVI is designed to determine the market’s expectation of future volatility over the next 30 days. It is created by computing a decentralized volatility index using cryptocurrency option prices, employing the popular Black-Scholes option pricing model while adapting it to the current crypto-market conditions.
As part of expanding the utility of CVI, we launched our first volatility token — ETHVOL, which is pegged to the Ethereum Volatility Index, enabling users to gain exposure to cryptocurrency volatility as part of their portfolio. In order to maintain the peg, we use a rebasing mechanism where every time a rebase is triggered, users receive more or less ETHVOL tokens directly in the wallet based on the change in Ethereum Volatility Index from the previous rebase. The next Volatility token to be launched is CVIVOL, which will be pegged to the CVI index, and will be traded on any Polygon-supported DEXs. Rebases are paid for by funding fees that then get redistributed to users based on them having a long or short position during the rebase. This ultimately creates a decentralized mechanism for ensuring the tokens continually track CVI.
However, everytime a rebase is necessary, an entity needs to call our smart contract on-chain to trigger the rebase function to run. As part of our goal to decentralize CVI, we have opted to outsource the job to Chainlink Keepers — a decentralized transaction automation service for smart contracts. Essentially, Chainlink Keepers perform secure off-chain computation to check for predefined conditions, and then call on-chain functions when those conditions are found to occur. In the case of Volatility tokens, Chainlink Keepers call the rebasing function of our smart contract every day at midnight UTC time.
Some of the key optimizations of Chainlink Keepers that make it an ideal solution for the Volatility tokens include:
- High Uptime — Chainlink Keepers are run by the same professional DevOps teams that have an established on-chain performance history of providing high reliability to Chainlink Price Feeds during extreme network congestion and market volatility.
- Low Costs — Chainlink Keepers have several gas-optimizing features that lower the costs of automating maintenance tasks for users, including a rotating node selection process to prevent gas price auction wars and stabilize costs.
- Decentralized Execution — Chainlink leverages a decentralized and transparent pool of Keepers to help provide strong guarantees around secure contract automation, saving teams time and mitigating the risks around manual interventions or centralized servers.
- Expandable Computation — Chainlink Keepers perform off-chain computations and generate calldata verifiable by smart contracts, allowing developers to build advanced, trust-minimized dApps at lower costs.
“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,” commented Shahaf Bar-Geffen, CEO of COTI. “Chainlink Keepers are reliable, decentralized, and seamless to integrate, ultimately offloading manual labor from our developers while still providing strong assurances that our volatility tokens stay pegged to the underlying CVI index.”
Chainlink is the industry standard for building, accessing, and selling oracle services needed to power hybrid smart contracts on any blockchain. Chainlink oracle networks provide smart contracts with a way to reliably connect to any external API and leverage secure off-chain computations for enabling feature-rich applications. Chainlink currently secures tens of billions of dollars across DeFi, insurance, gaming, and other major industries, and offers global enterprises and leading data providers a universal gateway to all blockchains.