The team members of the Crypto Volatility Index (CVI) have recently launched
– a safeguard against impermanent losses. Armadillo mitigates losses during crypto market fluctuations.
What is Impermanent Loss?
The prices of cryptocurrencies keep changing, and the crypto market is more volatile than ever. Investors often suffer significant losses by staking or depositing their cryptocurrencies in liquidity pools. Such losses are called impermanent losses.
How can Armadillo help?
The team of CVI developed Armadillo with the objective of resolving the issues of impermanent losses. Armadillo strives to protect liquidity providers against losses. According to the CVI team, Armadillo protects liquidity providers by limiting their exposure to the volatility of deposited cryptocurrencies.
Modus Operandi of “Armadillo”
Armadillo, designed in the form of an insurance contract, will allow liquidity providers to purchase coverage. Such coverage can is customizable as per the needs of the liquidity providers. The developers mentioned that users will be protected from any impermanent loss related to the specific crypto asset, during the specified period. If users experience any impermanent losses during the coverage period, they will get a refund for the same. The insurance amount, period, and chosen token pairs are represented by non-fungible tokens (NFTs), which represent the insurance contract.
Armadillo can be used on any liquidity platform or decentralized exchange (DEX) platform. Now available in the alpha version, Armadillo has more features than its beta version. The product derives its name from the animal because just like armadillos, the solution prevents multiple attacks in a way.