Crypto Volatility Index

From their launch announcement

The VIX, commonly referred to as the “Market Fear Index”, is one of the most important indexes in traditional finance, allowing traders to hedge or to take profit from market volatility.

[[COTI]] is launching CVI, the first decentralized version of the VIX for the crypto market, covering major crypto assets.

The $GOVI token will be introduced and act as a governance token for the protocol and platform

Basics

• Based in: Run by COTI who are registered in Gibraltar, but all employees on LinkedIn live in Israel.
• Started in / Announced on: 2021-10-13
• Mainnet release: 2021-Jan-19, the CVI token allows traders to trade against volatility

History

History:

• 2021-10-13 - Announcement
• 2020-Oct -Beta version
• 2021-Jan-19: Launch of Smart Contract (SC)
• 2021-Jan-27: Code Audit 1
• 2021-Jan-31: Token distribution
• 2021-Jan-08: Code release
• 2021-Apr: bug found
• 2021-Apr 11: Code Audit 2
• 2021-Mar-13: Critical bug fix. This caused some downtime, for which they issued GOVI rewards to Proof-of-Stake (PoS) manually.
• 2021-May-13: Professor Dan Galai, the creator of the VIX index, joins the Crypto Volatility Index’s board of advisors
• 2021-May-11 Added to KuCoin (KCS) Centralized Exchanges (CEX)
• 2021-May-31: Adds scaling via Polygon (MATIC)
• 2021-Jun-08: Integration with The Graph (GRT)
• 2021-Jun-10: Added to DeFi Pulse
• 2021-Jun-13: code audit 3: Peckshield Audit
• 2021-Jun-30: Margin Trading (x2)
• 2021-Jul-29: Volatility tokens ETHVOL, to allow trading on other platforms
• 2021-Jul-29: v2 Launched
• 2021-Aug-09: Added to Orion Pool Exchange aggregator
• 2021-Aug-10: Added to 1inch Network (1INCH)
• 2021-Aug-30: Dune Analytics added

Audits & Exploits

• Bug bounty program is not present.

Bugs/Exploits:

• There was one bug found, and because they did not respond through normal channels, the user had to make a Reddit account

They have had three audits, 2 were quite good, and implemented most of the suggestions. This was after the bug.

The code and audits are on github.

Governance

Admin Keys:

Admin keys in a Multi-Signature wallet (from page 19 of Peckshield Audit).

DAO:

They have plans for DAO, it's on their 2021-09-23 roadmap.

Treasury:

They have the keys to the smart contract with all the extra supply

Token

Token Allocation

From their medium post:

The initial circulating supply for the $GOVI token is 5.797M:

• 4.8M $GOVI tokens for $COTI holders who made a claim and provided liquidity to the Uniswap pool
• 150K $GOVI tokens as incentives for the CVI TestNet competition
• 847K $GOVI tokens for the CVI development fund

However it's unknown how much of this is true, as there seems to be no wallets with these amounts on etherscan.

Supply schedule

They have added staking (not in the white paper). This reward liquidity providers and allow holder of GOVI tokens to collect profit.

It’s unknown how many are distributed by staking because the whitepaper is out of date, but the current supply as of 2021-Oct is 8.980M GOVI compared to the original issuance of 5.797M tokens almost one year before.

Utility

From the launch announcement, there are three main uses.

CVI Trader's betting for volatility:

CVI has two main participants, Traders, and Liquidity Providers. Traders can use the CVI in order to hedge their cryptocurrency holdings against volatility.

liquidity provider's who bet on volatility:

liquidity providers on CVI play the role of the counterpart for every trade made on the platform.

And GOVI holders who collect platform fees:

By participating in the platform, by either trading on the platform or taking part in the governance of the platform, $GOVI holders will also share fees from the CVI platform.

The platform is currently collecting 500k in fees (annualized).

Coin Distribution

See etherscan where the contract owns 70% of all tokens, and presumably pools all insider funds with future staking rewards.

Technology

• Whitepaper can be found here.
• Code can be viewed here.

Implementations

• Built on: Ethereum
• Programming language used: Solidity

Fees

0.3%

Staking

Yes

Liquidity Mining

Yes

Interoperability

Polygon (MATIC), and soon Arbitrum

Oracle Method

Right now they get a data feed from Deribit Exchange, the options exchange. But they plan to move to Chainlink (LINK).

Their Other Projects

This is by the COTI team

Roadmap

• Can be found here.

Future milestones:

• Platform balancing and improvements
• Release of more Volatility Tokens
• Decentralised Autonomous Organisation (DAO)
• Impermanent Loss (IL) protection product (this will be a major product)
• Arbitrum Rollup: This will be a scaling solution with low fees
• Leverage Volatility Tokens
• Increasing cooperation with On-Chain Data Oracle such as chainlink
• New coins supported: COTI, and Bitcoin (BTC) seem likely

Competition

• VOLMEX, a smaller startup with less platform usage and less Total Value Locked (TVL). There is a write up on VOLMEX here.
• there is the risk a larger exchange, for example the one they get their data from Deribit Exchange, will jump ahead. However that will just be on one exchange, the CVI token will be across exchanges, and will allow hedging against volatility on CEX's.

Pros and Cons

Pros

• There is a proven product and market in the traditional financial world. This represents a huge market in the fiat world with 2 trillion traded per year, with 2 billion in fees in VIX, and the team knows the space very well.
• They have a working product already earning substantial fees.

Cons

• A bigger player might get there first.
• They have no bug bounty, and have lots of work to do in communicating with token holders about distribution and security. One these fronts they are not responsive.
• The token distribution is confusing and doesn't match their announcement. There are risks of inflation or dumping.

Team, Funding and Partners

Team

• This project is run by COTI, who's full team can be found here. In particular:
  • Amir Hagafny is CVI's Software Engineer
  • Yoni Neeman and Tomer Amrarnik are major contributors to the github repository.
  • Professor Dan Galai; creator

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