We are glad to announce that we have made a major breakthrough in the DeFi space by launching an integration for the Theta vault with Uniswap V3 concentrated liquidity. This integration promises to revolutionize the way traders handle volatility tokens. With this new implementation, traders can experience minimal slippage on trades while requiring significantly less liquidity than traditional Uniswap V2 type DEXs.
The Theta vault that is currently deployed on Arbitrum separates its liquidity between the CVI platform and Sushiswap, a DEX with V2 AMM model. The Theta vault solves the problem of time decay, however — the liquidity on the DEX with AMM V2 model is not capital efficient enough for the $CVI token to be highly liquid.
What is concentrated liquidity?
Uniswap v2 distributes liquidity across all potential values, from 0 to infinity. This means that a substantial portion of the offered liquidity may never be utilized, as trades may not occur at a particular price. To address this issue of capital inefficiency, Uniswap v3 introduced the concept of concentrated liquidity. This feature enables liquidity providers (LPs) to deploy their liquidity more efficiently between any two “price ticks” (as depicted by the blue bars), providing a more capital-efficient solution than Uniswap v2.
Advantages of concentrated Liquidity — Significantly Lower Slippage and Liquidity Demands
The Theta vault integration with Uniswap V3 is expected to transform the way traders manage volatility trading via the volatility token ($CVI). This innovative iteration will provide traders with significantly reduced slippage during trades while requiring a substantially smaller amount of liquidity than what is typically needed on the traditional Uniswap V2 type of decentralized exchanges.
The Theta vault’s deep and efficient liquidity is a critical requirement for launching the leveraged volatility tokens, which have been part of CVI’s vision since the beginning. As Uniswap v2 distributes its liquidity between 0 to infinity and the CVI ranges between 50 to 200 it will only make sense to move to a uniswap V3 model where the liquidity can be deposited between 2 “price ticks”(50 & 200). By providing Uniswap V3 concentrated liquidity, the Theta vault brings greater capital efficiency to the volatility tokens, making them a more viable hedging tool for large players and power users in the DeFi ecosystem.
For example:
Theta Vault liquidity — $700K
CVI — 100
The implications of this breakthrough are significant. Concentrated liquidity for volatility tokens could usher in a new era of risk management in DeFi, where traders can effectively hedge against market volatility. It could also open up new investment opportunities and pave the way for new financial instruments that were previously impossible to create.
What is the best way to test the Uniswap V3 Concentrated Liquidity Testnet?
The CVI testnet allows users to perform all the functions they would on the mainnet without risking any real funds. This includes actions such as mint, burn and swap on DEXs. The testnet provides a safe environment for users to experiment and test out new features without worrying about any financial losses.
As of today, the testnet is up and running and has been made available to selected members of the community. In the next few days, a link to the testnet and a comprehensive tutorial on how to use it will be published for wider access. This is an exciting development that offers community members the opportunity to experience and explore the testnet firsthand, and provides valuable feedback to further improve its functionality.
For all of our updates and to join the conversation, be sure to check out CVI channels:
Website: https://cvi.finance
v3 Litepaper: https://cvi.finance/files/CVI.v3.Litepaper.pdf
GitBook: https://docs.cvi.finance/
Whitepaper: https://cvi.finance/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/yuDsy7SM2H
