The Crypto Volatility Index (CVI) announced the integration of Chainlink Keepers to automate token maintenance linked to the volatility indices. Chainlink Keepers will automatically rebase the Volatility token supply every day at midnight UTC to help keep it anchored without any human input or centralized procedures.
COTI is a “finance on the blockchain” ecosystem that has introduced a new kind of DAG-based base protocol and infrastructure that is scalable, fast, private, inclusive, low cost, and optimized for finance.
Building, accessing, and selling oracle services required to enable hybrid smart contracts on any blockchain is something Chainlink has been setting industry standards for. The integration occurred as Chainlink Keepers is managed by the same experienced DevOps teams who power Chainlink Price Feeds.
Develop a Fully Automated Decentralized Volatility Token
Offering a trust-minimized solution, Chainlink Keepers are designed for cheap costs and decentralized security to prevent single points of failure. The COTI team developed the Crypto Volatility Index (CVI) to build a “market fear index” for the crypto sector.
CVI measures the market’s estimate of future volatility over 30 days. To create it, a decentralized volatility index is computed using crypto option prices, adapted from the famous Black-Scholes option pricing model.
The first volatility token, ETHVOL, released, is linked to the Ethereum Volatility Index, allowing users to include cryptocurrency volatility in their portfolio. As a result of the rebasing process, users get more or fewer ETHVOL tokens in their wallets depending on the change in the Ethereum Volatility Index since the last rebase.
CVIVOL, the next Volatility coin, will be linked to the CVI index and traded on any Polygon-supported DEX. Rebases are financed by funding fees, subsequently dispersed to users depending on their long or short positions. This provides a decentralized method for tracking CVI.
When a rebase is required, an entity must contact the smart contract on-chain to initiate the rebase. To decentralize CVI, Chainlink Keepers comes in effect, a decentralized transaction automation service for smart contracts. Chainlink Keepers use secure off-chain computing to check for specified criteria and execute on-chain functions if they are met.
Chainlink Keepers has many important improvements that make it suitable for Volatility tokens:
Low Downtime– As mentioned above, Chainlink Keepers is managed by the same experienced DevOps teams, thus providing high reliability to feeds during network congestion and unstable market.
Low Costs – Chainlink Keepers include many gas-saving features, including a rotating node selection mechanism that prevents gas price bidding wars and stabilizes costs.
Decentralized Execution– Enabling decentralized execution saves teams time and reduces risks associated with human intervention or centralized servers.
Expandable Calculations– Large-scale off-chain calculations are performed by Chainlink Keepers, enabling developers to create sophisticated, trust-reducing Dapps at cheaper 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.”
Integration of Chainlink with CVI provides an opportunity to provide new DeFi applications depending on anticipated crypto market volatility, entirely decentralized. Also developing a permissionless long/short trading mechanism that is completely decentralized and self-adjusting is under process. Thus, extending these offerings and integrating data from other trading platforms to create a more comprehensive DeFi market is a revolutionary move by the creators and something to look out for.
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