As the crypto industry grows and matures, it has become increasingly clear that the highly volatile nature of cryptocurrencies has created a demand for a flexible and dynamic approach to risk management, and traditional hedging strategies may no longer be adequate for such an emergent and “always on” asset class.
Whilst options desks have been firmly established as the de-facto risk management tool for investors in traditional financial markets, the fact remains that the underlying concept of put options as a tool for hedging has changed very little in the last 50 years.
Although the crypto world has seen the emergence of some dedicated options platforms, these are mostly carbon copies of the same options trading desks found in the traditional finance world, and many users see them as highly complex.
Now, DeFi platform Bumper is throwing down the gauntlet to challenge the might of the traditional options desk with an innovative solution for permissionless risk trading in the crypto market.
Instead of pitting buyers and sellers in a combative, zero-sum match where nobody even needs to own the underlying asset, Bumper provides a form of volatility protection for the discreet crypto assets held by its users.
Furthermore, Bumper is designed to afford retail investors with a simple interface for instant risk management that requires no sophisticated knowledge, and an equally efficient yield-generating engine. Economic modeling simulations of the protocol, using many years of actual price data, show that Bumper is outperforming competitor options desks, including during protracted downtrends and Black Swan events.
But what’s really innovative is how premiums are calculated, not based on historical or implied volatility, but on actual market conditions – something which is simply not available on traditional options desks. In other words, premiums are based on how volatile the market is, not what it might be.
“Developing such a radical idea has taken significant time and persistence” says Co-founder and Chief Marketing Officer Jason Suttie. “The sometimes extreme volatility in the crypto markets is the main cause of aversion for potential investors and options desks are simply too complex and arcane for many. Bumper changes all that, with a really straightforward product offering in the form of price protection”.
The company is now counting down to launching what it believes to be a groundbreaking protocol that challenges the very heart of the aging options desk, and are today launching a Liquidity Mining program via the decentralized Uniswap v2 exchange in advance of their imminent launch.
Under the program, liquidity providers supplying the Uniswap decentralized exchange (DEX) will be eligible for a share of a 1.82M emission of the protocol’s native BUMP token, which users are required to hold and ‘bond’ to open protection or earning positions using Bumper.
Suttie goes on to say “Bumper will be a simple, frictionless and cost-effective vehicle for value protection on the one side, and a means of steady yield generation on the other. This program offers an unparalleled opportunity for DeFi enthusiasts to be rewarded for supporting Bumper in advance of the protocol’s launch”.
Full details of Bumper’s liquidity mining program can be found here.