Crypto derivatives exchange FTX is launching tokens that track bitcoin volatility

Quick Take

  • Crypto derivatives exchange FTX is set to release a pair of bitcoin volatility-tracking tokens – BVIX and iBVIX
  • The tokens will hold a basket of FTX MOVE contracts
  • FTX CEO Sam Bankman-Fried told The Block that the tokens are different from most existing volatility products in that they try to represent the overall market expectations

Crypto derivatives exchange FTX is launching two new tokens tied to bitcoin's price volatility. 

The new tokens - BVIX and iBVIX – represent a long and a short position, respectively, on the magnitude of bitcoin's price swings. The product release is perhaps a timely one, given the market's volatility in recent weeks.

"The goal of the tokens is to give users an easy, liquid way to trade on future implied volatility," FTX CEO Sam Bankman-Fried told The Block. 

The BVIX and iBVIX tokens hold a basket of FTX MOVE contracts – which settle at the dollar movement of bitcoin against U.S. dollars – and track the daily returns of being 1x long or 1x short the implied volatility of bitcoin.

Source: FTX 

Specifically, each token consists of tomorrow's MOVE contract, next week's MOVE contract and the two weeks after that, as well as next quarter's MOVE contract and the quarter after that. 

The tokens will be launched sometime next week, Bankman-Fried told The Block.

BVIX and iBVIX are different from most existing volatility products, according to Bankman-Fried, in that they seek to represent the overall market expectations.

"Right now most of the volatility products are specialized and less liquid, and better for making specific trades on specific outcomes, but don't present a clear indication of, overall, how volatile expectations are," Bankman-Fried told The Block.

"The goal is to make them the default reference and trading tool for pure volatility expression in crypto," he added. 

FTX's webpage highlights that as ERC tokens, BVIX and iBVIX can be purchased on a spot market like any other such token. Users do not need to bother with collateral, margin, or liquidation prices.

Bankman-Fried further pointed out that because they are ERC tokens, they can be listed on other exchanges beside FTX. Users can also freely withdraw the tokens from their FTX accounts and send them to other supported platforms.

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