Coti is stepping up efforts to build a volatility benchmark for digital assets, bringing in Professor Dan Galai, one of the original minds behind the Cboe Volatility Index (VIX), to advise the development of its decentralized Crypto Volatility Index (CVI).
Large intraday price swings have been a defining feature of cryptocurrency markets since their early days. Double-digit moves are common, making volatility one of the most visible characteristics of the asset class. Still, volatility itself is not unique to crypto. In traditional finance, it has long served as a core measure for understanding risk, expectations, and sentiment, especially in options markets.
Adapting the VIX Framework for Crypto
The VIX is one of the best-known market gauges in equities, tracking 30-day implied volatility in S&P 500 options. The concept was originally developed by Dan Galai and Menachem Brenner in the late 1980s and was introduced to the market in 1993. Over time, it became a widely used barometer of trader stress, risk perception, and demand for protection, earning the nickname of the “fear index.”
Coti now wants to bring a similar framework to crypto markets. Its CVI is designed to reflect 30-day implied volatility for bitcoin (BTC) and ether (ETH), giving market participants a reference point for pricing risk and monitoring expectations. The project aims to mirror the utility of the VIX while operating in a fully decentralized format.
Risk Management and Hedging Use Cases
According to the project vision, the CVI is not meant to be only a sentiment gauge. Coti says the index could help traders hedge against rising volatility or incorporate volatility exposure into broader trading strategies. Elevated volatility is often associated with periods of market stress and downside momentum, but historical experience also shows that correlation does not always imply direct causation. That makes a structured volatility measure valuable not just for signaling fear, but for improving risk management.
To support that effort, Coti has added Galai to its advisory board. With deep experience in risk management and financial derivatives, he is expected to help guide the CVI as the decentralized protocol is rolled out. Galai said he looks forward to helping build advanced risk-management tools for investors in a new and often wild asset class, adding that he believes the CVI team has the expertise to turn theory into a useful product.
As the crypto market matures, infrastructure tied to volatility measurement, investor expectations, and hedging is becoming increasingly important. If successfully deployed, the CVI could mark a notable step in adapting traditional market-risk frameworks to the decentralized digital-asset economy.