The cryptocurrency market is currently experiencing an unusually calm period in terms of price action—perhaps the calm before the storm?
Understanding the Crypto Volatility Index (CVI)
The Crypto Volatility Index (CVI) is the cryptocurrency equivalent of the traditional market's VIX. Created by the COTI team in collaboration with Professor Dan Galai (one of the original VIX creators), CVI serves as a native "fear gauge" for crypto markets. The index typically ranges between 0 and 200:
- 0–85: Low volatility
- 85–105: Medium volatility
- 105–200: High volatility
As of now, the CVI stands at 56—a two-year low.
How to Profit from Low Volatility?
1. Betting on Volatility (Long CVOL)
If you anticipate increased market volatility:
Buy CVOL tokens, which are pegged to the CVI index.
- Mint directly on CVI Finance or purchase via SushiSwap.
Caution: CVOL carries a built-in funding fee.
- The lower the CVI, the higher the fee (implemented as a daily negative rebase).
- Ideal for short-term plays expecting imminent volatility.
👉 Discover the best strategies to trade CVOL
2. Capitalizing on Others’ Bets (Theta Vault)
For a passive, "house-always-wins" approach:
Deposit USDC into the Theta Vault.
- Works similarly to GLP/GMX dynamics—depositors earn when traders lose.
- Current APR: 36% (but carries risk if CVI spikes).
- Best suited for long-term holders.
Key Takeaways
- CVI offers innovative DeFi primitives for volatility trading.
- CVOL is optimal for short-term speculators; Theta Vault favors patient investors.
- Team’s roadmap promises further advancements—worth monitoring.
FAQs
Q: Is CVOL a safe investment?
A: It’s high-risk/reward. Negative rebates erode holdings if volatility stays low.
Q: Can I lose money in the Theta Vault?
A: Yes, if CVI rises sharply, vault depositors absorb losses.
Q: How often is CVI updated?
A: Real-time, reflecting 30-day implied volatility of BTC/ETH options.