Bumper: New DeFi Protocol unlocks trading strategies to master volatility
The landscape of financial tools, particularly in the realm of Decentralised Finance (DeFi), has remained relatively stable over time. While there have been advancements in aspects like order books and Automated Market Makers (AMMs), the core experience of trading, along with its terminology and predominant strategies, has not seen a significant transformation.
Traders continue to rely on technical analysis to forecast future price movements and base their positions on bullish or bearish predictions, utilizing tools such as Spot, Futures, Perpetual Contracts, or Options.
Bumper, a game-changer in the DeFi space. Bumper stands out as a hedging tool designed specifically for the DeFi ecosystem, offering robust price protection and unique trading opportunities to shield against downward market volatility.
While it bears some resemblance to traditional financial mechanisms such as Stop Losses, Options Desks, and insurance policies, Bumper sets itself apart with its innovative functionality and fundamentally different underlying technology. This makes it not just a tool for managing risk, but also a groundbreaking addition to a trader’s arsenal, redefining the approach to navigating the DeFi markets.
Bumper provides two functions that can underpin novel trading strategies:
Hedge: Value Protection
With Bumper, you simply choose a price floor (similar to a strike price) for your crypto assets and a protection term (like an expiry date). If market prices drop, your asset’s value will never fall below this floor. However, if the market surges, your asset’s value rises with it. Utilise a simple Bumper Hedge position to protect against downside, while still having exposure to upside.
Earn: Generate Real Yield
Bumper provides a sustainable way for liquidity providers to earn yield by depositing stablecoins and assuming some of the risk from buyers of protection. For their part in the market they derive their yield directly from the premiums paid by hedgers. With highly attractive real yields and additional token incentives, Bumper on average generates enhanced returns compared to DeFi staking and options desks. Estimated Yield 3-18%
6 Innovative New Trading Strategies:
The simplicity and flexibility of Bumper enables traders to be more successful whichever way the market moves, below we introduce strategies and tactics to beat the market with Bumper.
You’re short-term bearish but long-term bullish. Deposit the asset into Bumper with a defined floor price (up to 99%) and timeframe (as little as 7 days). If the downside price movement plays out, traders can claim USDC to the full value of their floor price, then re-accumulate the asset at a lower price and ride longer-term gains to the upside.
You’re long-term bullish but want to hedge against some potential short-term price correction.
Deposit the asset into Bumper, you own the asset and you’re long, but have protection against the downside. If the price rides higher you’re only charged a diminishing premium streamed daily and importantly have peace of mind with the downside hedge. If the correction does play out at the end of your term you’re returned USDC at the protected price.
Lock in Profits
Price has pumped on an asset you hold, you want to lock in profits but also retain exposure to further upside. As a trader, you lock in profits with a Bumper hedge position following a pump in price. If the price rides higher you still own the asset and ride those gains higher, if a correction does play out, at the end of your term you’re returned USDC at the protection price.
The market appears to be bullish, but pullbacks are expected and protection is required to maximize profits. As a Trader moving with the upward momentum of the market, you take a Bumpered position to protect at a floor and, once you feel the upward movement has breached a key resistance zone, cancel your position and set another floor at a higher point, securing that support/resistance level.
If a downward move occurs and the new support is properly breached, once out of your policy then a claim will act as an excellent trade-out at the top. Use the newly acquired stablecoin funds to buy back the asset at a cheaper price. Rinse and repeat. If the price keeps going up then refer to Step 1.
Trade Yield-Bearing ETH (LSTfi)
You’re long-term bullish on ETH and have it staked on Lido. Instead of re-staking your stETH in Balancer or Pendle for another 3-5% annual APR, play the accumulation game and trade your stETH using Bumper. Trade-up your yield-bearing assets. Use the ‘Short Accumulation’ or ‘Trailing Protection’ strategy above to trade downside volatility and re-buy cheaper stETH. Each successful accumulation trade will potentially be 2-10%, rinse and repeat 5-10 times through the year for massive compounding trade exposure instead of re-staking stETH for a low APR.
Bumper is unique in the sense that it provides positive PNL exposure whatever way the market moves. Using Bumper as a consecutive hedge utilises the accumulation and trailing protection strategies detailed above in a back-to-back fashion.
Eg. Taking a 99% floor, 7 day position. If the price has dropped, claim USDC at the floor price and re-buy the asset at lower prices then repeat the 99% 7 day position. As prices rise and fall you benefit from accumulating more of the asset and the rise in prices.
A new toolbox for savvy Traders
Bumper unlocks a raft of new flexible functions and strategies for traders, breaking free from the restrictive boundaries commonly seen in Options platforms, and the dependency on ample liquidity to execute orders in Futures & Perpetuals.
Savvy traders, always in pursuit of outperforming the market, will gravitate towards pioneering tools that offer both cost-efficiency and higher effectiveness. Bumper revolutionises traditional strategies, introducing approaches that are not only more efficient but also less dependent on short-term market trends.
Bumper is now live on Arbitrum and is providing traders with exclusive early adopter incentives:
- $0 Trading Fee: Enjoy trading with zero fees for a limited time.
- Up to $25 Premium Rebate: Takers receive premium rebates in weekly epochs.
- BUMP token trading volume incentive.
Trade now at bumper.fi
Disclaimer: This is a paid post and should not be treated as news/advice.