Bitcoin Volatility index (VIX for BTC)

Summary : BTC Volatility index (Like VIX, but for BTC - or any major coin for that matter)

Use the following sections for a longer description, or to establish product logic or rules:

  • Motivation : What is the market and what problem does it solve? Why would it attract liquidity? Why is it important to prioritize over other proposals?
    I feel this would be a novel product for users to trade as there is little opportunity to trade volatility in current crypto exchanges - i’d expect there to be a fair amount of demand from users to trade something like this

  • Use cases: What are the use cases of the market? What trading/ investing strategies would it support?
    Users could hedge the rest of their portfolio against volatility or long volatility itself - there are a number of trading strategies in which a product like this would be useful. Also I believe it would attract a lot of demandfrom users simply wanting to trade a new market

  • Differentiation: How exactly is this different than the other markets we already have? Are there exchanges who offer similar markets already?
    I believe this is a pretty novel product/market in the crypto space, i’ve only ever seen a volatility index for stocks before

  • Implementation: Describe how would you create the financial product? ****What metric will the product track?
    This will be constructed using a similar methodolgy to how the VIX is built for stocks, except it will track the volatility of Bitcoin or WBTC against USD (in the bitcoin example)

    • If derivative market : What is the pricing mechanism for the product? What are the possible sources of data for the price metric?
      This would possibly make use of a chainlink Oracle that records volatility in order to calculate the price of this derivative, hopefully this would also then have the bonus of being very resistant to being manipulated. Achilleas mentioned a possible Oracle provider called genesis volatility
  • Risks: What are the risks unique to this market? How could pricing data manipulation occur? What are current or future concern possibilities with the way the price identifier is defined?
    If an oracle other than LINK is used, then I’m not sure if any other API providers currently provide BTC volatility - one may have to be set up or use some contract on Cosmos? itself to work out the volatility. unfortuately I do not have the technical knowhow to answer this question adequately , hopefully one of the devs might have some insight?