DeFi investors are always on the lookout for new ways to invest their crypto assets, and the ongoing evolution of the Crypto Volatility Index might be something they want to follow, as it promises to open up tons of new trading possibilities.
The CVI was launched last year and is an interesting option for DeFi traders as it provides them an opportunity to profit from the instability of the cryptocurrency markets. Cryptocurrencies are known for their capricious nature, with the price of many tokens bouncing around so much they can double value in a matter of hours, only to see all of those gains – and then some, wiped out in the next 30 minutes.
It’s for this reason that COTI created the CVI, which is based on the VIX, an index that measures the volatility of traditional stocks, often referred to as the “Market Fear Index”. With the CVI, crypto market traders gain a way to hedge against this extreme volatility.
The CVI uses the Black-Scholes options pricing model to create
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