Vyper Protocol, a major player in the world of DeFi, is set to launch ethereum (ETH) volatility futures in the near future. The new product will provide digital asset investors with a simpler way to hedge against market volatility than options.
The futures, which are tied to Deribit’s forward-looking bitcoin volatility index (DVOL), will be available in Vyper’s modular infrastructure starting from the 6th of March. The index measures ethereum’s 30-day implied volatility, which is calculated using Deribit’s options order book. For the exact specifics on how the DVOL Index is built check here.
Volatility trading involves betting on the future stability of an asset rather than taking a view on the direction of future price moves. With the new offering, traders can bypass complexities involved in setting up options strategies and directly buy and sell volatility similar to trading futures tied to ethereum’s price.
This product is particularly useful for those who want exposure to ETH volatility but do not want to trade complex options strategies.
Vyper Protocol users will be able to trade custom expiry forwards, with the exchange planning to expand the offering to options later. The volatility forward is a linear contract which can be priced,margined, and settled in various currencies including both stables (USDC, USDT, etc) and non-stables.
How do I trade it?
Just head to Vyper’s CREATE page and you will find ETH DVOL among the settlement values available, meaning you can now create forwards which settle on the ETH DVOL value from Deribit. Most importantly, you can build derivatives using different collaterals, meaning traders can settle such a trade in USDC, other currencies are accepted too.
Traders should note that DVOL futures, like other derivatives, are leveraged products that can amplify both gains and losses.