Chainlink Keepers chosen to automate impermanent loss protection payouts on Armadillo

Chainlink Keepers chosen to automate impermanent loss protection payouts on Armadillo

Armadillo, a multi-chain impermanent loss (IL) protection solution powered by the Crypto Volatility Index (CVI) from COTI, will be using Chainlink Keepers on Polygon to automate IL protection payout.

CVI operates a basket of volatility products, including Armadillo’s impermanent loss protection.

The CVI team developed a toolbox of decentralized risk management solutions that are applicable and relevant in today’s highly dynamic crypto markets. Armadillo’s impermanent loss protection is just one recent addition to this toolbox and looks to be one of the most promising solutions for liquidity providers.

CVI + Chainlink Keepers

Chainlink Keepers supports secure and cost-efficient automated payouts to liquidity providers (LPs) for their incurred impermanent loss. As a result, the payout of impermanent loss protection can be made in a fully automated way, without any manual action required from LPs.

In order to help automate payouts and further decentralize Armadillo, a dependable solution was needed. Chainlink Keepers is a decentralized service purpose-built to manage tasks on behalf of smart contracts that “wake” up smart contracts when they need to perform critical on-chain functions.

In this case, Chainlink Keepers monitors Armadillo’s impermanent loss protection platform to check if any protection periods have passed. Whenever a user’s protection period has ended, Chainlink Keepers request the payout on behalf of the user, enabling a seamless user experience.

Crypto Volatility Index (CVI)

Using the Black-Scholes option pricing model, the Crypto Volatility Index (CVI) computes the implied volatility of bitcoin and ethereum option prices and then analyzes how markets anticipate future volatility.

CVI is a full-scale decentralized platform that brings the popular “market fear index” to the crypto market, which is created by computing a decentralized volatility index from cryptocurrency option prices and analyzing the market’s expectation of future volatility.

CVI is a DeFi tool suitable for analyzing volatility, hedging portfolios, and earning from being a liquidity provider.

Armadillo is a protocol that offers:

Check out Armadillo’s Whitepaper to learn more about the platform.

“We decided to decentralize the payout function of impermanent loss protection using Chainlink Keepers because it is operated by the same pool of time-tested, provably reliable node operators that currently help secure tens of billions of dollars across DeFi, even during record levels of network congestion and extreme volatility. The proven infrastructure of Chainlink helps ensure that every USDC payout for Armadillo’s impermanent loss protection is executed on time in a trust-minimized manner.”
– The CVI Team

Some unique features of Chainlink Keepers include:

“We’ve been using Chainlink Keepers to help rebase our volatility tokens, so the smart contract automation solution has already saved us a lot of operational costs and development time. With this new integration, Chainlink Keepers help ensure that payouts in our impermanent loss protection feature are executed autonomously, further establishing a high standard of security and decentralization for our platform.”
– Shahaf Bar-Geffen, CEO, COTI

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