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Volatility is at a record low, How to profit on the DeFi long Volatility?

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One interesting innovation in the DeFi space is the crypto Volatility Index (CVI).

Original article by korpi, member of DeFi Omega

czgsws, BlockBeats

It's a pretty boring time in the market right now in terms of dollar prices... The calm before the storm, perhaps?

The cryptocurrency Volatility Index (CVI) is almost at an ATL (all-time low), and if you believe some big moves are coming soon, you have a chance to profit from them without having to predict whether prices will go up or down.

What is the crypto VIX? It is the cryptocurrency equivalent of VIX, an index that tracks volatility and was created by the COTI team in collaboration with Professor Dan Galai, creator of the original VIX, in order to create a prototypical "market fear index" for cryptocurrencies. Typically, CVI ranges from 0 to 200:

· 0-85 Low volatility

· 85-105 Moderate volatility

· 105-200 High fluctuation

The current CVI of the crypto market is 56, the lowest in nearly two years.

So how do you make money on CvIs?

There are two ways:

1. Bet on volatility

2. Profit from people betting on volatility

Bet on volatility

If you believe volatility is coming, CVI will rise. Regardless of the direction of the price, you can buy tokens linked to the CVI index -- CVOL.

Mint on: https://cvi.finance

Or buy it on SushiSwap if it's cheaper there.

Be sure to pay attention to the capital cost when buying. CVOL has a built-in capital cost. The lower the CVI, the higher the cost.

This is implemented in the form of a daily negative rebase -- that is, the number of CVols you hold will decrease each day. So you should buy CVOL only when you expect volatility to come soon.

Profit from other people's bets on volatility

If you'd rather act like a casino, deposit the USDC in the Theta Vault. Theta Vault works like a GLP versus a GMX -- depositor versus trader gains and losses. The current APR is 36%, but you also lose money when the CVI increases a lot.

Unlike CVOL, Theta Vault is a long game. In the short term, traders may make a profit at the cost of Theta depositors' assets. But as GLP demonstrates, casinos always win in the long run.

All in all, CVI is an interesting new DeFi primitive. Some innovation in the boring flood of forks. The team has demonstrated their prowess, and the roadmap is still full of innovations that are definitely worth a look.