Introducing Bumper - A novel crypto price protection protocol
We'd like to introduce the HIVE community to Bumper - an innovative DeFi protocol due to launch in 2022 that effectively stops you from having your day spoilt by crypto market crashes.
There is quite a lot to the Bumper protocol, so to make it easier to digest the information, we are going to break up each element, with links coming from this post so you can learn about what Bumper is and how it works.
We also encourage the HIVE community to come and earn token rewards for giving us your honest feedback as BETA testers!!!
The problem which Bumper seeks to solve
Cryptocurrencies, as we are all aware, are volatile, sometimes extraordinarily so.
For holders of digital assets, the holy grail is to enjoy the benefits of volatility when the price rises, and somehow avoid losses when it moves to the downside.
There already exist a range of solutions which can be employed to maximise gains and minimise losses, but far too often these are overly complex for the average user (e.g. through the use of derivatives such as Options contracts), or only solve half the problem, (such as the consequences of using a Stop Loss only to be blindsided by a swift market rebound).
Conversely, the volatility of cryptocurrency presents other investors with the opportunities for speculation on the next 100x altcoin, or through earning stable yields. For these individuals, determining how and where to position their assets to generate the best return based on their risk tolerance is equally important.
We’ve seen this year especially how volatile markets can get. The question is not one of whether a crash will happen again, but when.
What is Bumper?
Bumper provides an alternative solution to existing risk markets and products (e.g. stop losses, Options etc) for crypto users with an innovative price protection protocol for crypto assets.
In addition, thanks to it’s novel design, Bumper also boasts a number of interesting second order effects including:
- Reducing the parasitic cost of slippage to near-zero.
- More attractive premiums when compared to Black Scholes and other Options pricing methods.
- Collateralisable tokens with the downside volatility (and thus the liquidation risk) removed.
- Customisable risk tolerance for depositors.
- Easy to use Web3 environment without the requirement for KYC identity verification.
Overview
The value proposition of Bumper is that, on one side, it provides price protection from downside volatility, whilst letting you ride the rips should the market revert and head back upwards again.
Simultaneously, Bumper creates opportunities for yield seekers to generate returns, derived from the premiums charged to protection seekers.
Effectively, Bumper is a new form of risk market - not a stop loss, not an options desk, nor a form of traditional insurance, but which shares some features with each, all in a provably fair environment, with a really interesting philosophy behind it.
The native ERC-20 BUMP token acts as both a utility, staking and governance token, with a fixed supply of 250M.
Building the protocol has taken longer than originally intended, partly due to the complexity, and the sheer size of the code base. It has gone through multiple rounds of smart contract auditing, and currently we are about to move into Beta release before our mainnet launch later in the year.
Learn more
To make it easier to understand the actors and mechanics of Bumper, we’ve split each section it into different articles.
Read them below for a really good introduction. It's advised to read them in order:
- #1 Takers - protect your crypto
- #2 Makers - earn yield
- #3 BUMP token
- #4 Staking
- #5 Premiums and Fees
- #6 Pools
For more info, you can also visit the Bumper website, or join the community in our Discord server.
We also recommend reading the Bumper Litepaper.