How Bumper’s Tech Protocol Will Quell Volatility Anxiety

Crypto is as volatile as an insubordinate stallion. Just when you think you’ve mounted it and are ready to ride out into the moonlit mountains, it bucks you off with barely a passing snort or frantically gallops away from underneath you from the merest insinuation of a malevolent breeze resounding off the icy lake of Twitter. We’ve all felt the bumps and bruises from a hard fall just at our moment of happiest grace.

Why Investors Fear Volatility

Volatility - particularly the sky-piercing upward variety that Bitcoin has enjoyed over the last decade - certainly was a key motivator for many getting into the crypto space. Come for the gains, stay for the tech, as the adage goes. Well, the technology of cryptocurrency is, finally, getting pretty darn sophisticated, with DeFi, in particular, making revolutionary bounds in the financial sector, and institutional capital now looking to migrate assets into decentralized finance to take advantage of blockchains’ innate capabilities when it comes to fast and effective finance.

Yet volatility isn’t going away. Just this past week, most currencies other than bitcoin have fallen 10% or more. Before hardened crypto-readers shrug that off, know that - for most financial markets - that would be seen as a grievous wound. These volatile waters, which degenerate day-trading apes and moonbois love to swim in, are anathema to experienced investors of wealth. Those self-same apes, if they do finally make it, are likely to take a second look at their usual actions if and when their wealth becomes enough to house and raise a family with leftover lambo money to spare. In short, we all want asset price protection - especially as a market continues to grow so rapidly.

The Importance of Protection in a Growing Market

There is now nearly $2.5 trillion in the crypto markets. Perhaps more if you count the tokenized digital assets like bonds currently being explored and issues by some pioneering banks. The rapid bucking of the fowls early days are perhaps done, but there is still a long way to go to stop 300 billion being casually cut out of the market due to regulatory headwinds or just the general chatter that is exploding around the mainstream crypto space as adoption continues at breakneck pace. DeFi’s ability to let digital assets earn a supernormal yield, especially at this time of low interest rates, means holders of crypto want to leave it in to let their gains grow. To do so price-protection is needed against asset volatility to protect retail and institutional users alike, and give investors a chance to put their assets to work earning a yield, while not having to de-list their productive exposure to the market

Bumper Finance is seeking to offer that protection. Usual price protection methods are not on-chain and can’t be used. Stop Losses have to be done through centralized exchanges and particular liquidity pairs. The chance of your asset being liquidated in a flash crash during your afternoon nap brings a level of high anxiety to proceedings. Also, it’s much harder for your asset to be productive on-chain which might need to be sold at a certain price point.

With Bumper Finance, Takers can lock in a price floor on your assets by paying a premium in USDC and by staking $BUMP, the governance and utility token, with Makers earning yield in USDC and the native $BUMP token. As both Makers and Takers need to stake $BUMP to take out protection, but they earn a yield on the $BUMP staked regardless, it adds to a collective growth of the ecosystem as more Makers and Takers join the protocol, ensuring users on both sides can earn a yield in $BUMP while enjoying Bumper Finance’s services.

How Bumper Works Under the Hood

Takers choose from a variety of price points through an easy-to-use UI in the Bumper dApp, and can protect their asset (on launch, ETH) and send it to the protocol to receive a representative token in return, called bumpered ETH. This bETH can be placed inside the protocol's own liquidity pools, or used in other parts of the ERC-20 ecosystem to earn a yield. Takers can redeem their policy anytime after 2 weeks, so if ETH’s price takes a nosedive, they can redeem their policy, return the bETH, and get the USDC price floor payout - even if it’s significantly above market value. Canny traders could even use this to make interesting shorting plays, without having to take their assets off chain in their usual work to do so.

Makers supply the capital for the protection, and naturally earn a substantial yield based upon which pool they collateralize. There is, of course, a guaranteed low stake pool. If Bumper’s innovative price-protection protocol can earn a better yield in the low risk pool than competing DeFi protocols, it has an excellent chance of growing to be a top DeFi protocol itself, and go on to underwrite the DeFi market and help propel it past its previous high point of growth - just as the big boys are getting involved. The key to this, of course, will be how Bumper Finance goes about protecting the assets entered into the protocol.

They have a large liquidity provision after their successful liquidity mining program closed and are backed by $10 Million in capital from Beachhead Ventures and Alphabit. This will allow them to guarantee policies even in the face of system shock right out of the gate. Then, by offering superlative yield in USDC and the native $BUMP token, which confers governance and is used to participate in all parts of the protocol, it can grow its on-chain price protection and fill the hole in the market which currently exists. The protocol is of course built to resist calamitous shocks. Cascading redundancy modules serve to protect the low yield tranche entirely by rebalancing the pools, and arbitrage bots can be let in to ensure total collateralization. Then of course, it’s all the money in the reserves.

The Bumper Pre-Sale

Bumper’s Pre-Sale launched on the 14th, with more token sales shortly after. Their “God-Mode for Crypto” might answer quite a lot of traders and holders' prayers, and create a new market for investors to generate yield from their DeFi-committed assets.