Crypto VIX

** Crypto volatility index **

how is this different from existing vol metrics

  • volatility instruments allows investors to hedge their core position without taking a counter position. Currently there are bitcoin volatility contracts available through bitmex and through ftx. I would propose that a indexed volatility - crypto large cap vol index(top 10), crypto mid cap vol index(10-50), crypto small cap vol index (50-200)or crypto market vol index (top 100) would allow for a, more dynamics around index inclusion/exclusion/rebalancing allowing market participants to express more complex views as well as hedhing.*

Which metric will your synth track?
*ftx already have a metric of crypto indexs which could be used as a data point for volatility indexs *

How will you get data for your metric
if data from FTX index’s isnt granular enough, a inhouse index could be created using data directly from trading view which is more than sufficient.

What collateral would you use for this synthetic
I think all stable coins should be able to use as collateral, and to take this a step further I would like to allow LP for stable coins to be used as collateral. such as 3CRV or cUSDC

Describe how you would create this synthetic
Describe in detail how you would create this synthetic. You might want to consider

  • I’m unsure how a volatility index is coded, or the mathematics behind this, or how to import data directly from trading view, but these are the steps to I, as coding illiterate person believe are needed to setup such a metric

  • it is possible that the idea of a small/mid cap VIX will result in too much movement of tokens in and out of the index. as well as the overall indexs volatility would be too volatile to speculate on. In which case I would say a broad market (top 100) weighted by market cap would work better.

  • How you would make sure that people who would find the synthetic useful could access it.
    perpetual futures are by far the largest derivative markets and I believe the most suited to such an instrument

Have you looked into Benchmark protocol? I think they are a token that tracks volatility as well (so not too dissimilar from what you’re suggesting) - just an interesting potential competitor to take note of :slight_smile:

So I guess two different ideas that approach the same issue, hedging against volatility.
Volatility for leveraged farmers leaves them exposed liquidation risk. which is the market protocols like mark and helmet look to serve. the biggest difference is that mark utilizes the VIX, where as I would like to see such an index created in crypto,

really interesting project though. I wonder how granular their data is on SDR’s?