Volatility in the crypto realm makes even the bravest Wall Street trader run for the hills. Surging 200% pumps followed by sickening crashes, sometimes in 24 hours, means positions get liquidated at a rate of knots, and portfolio values go from meaningful to meaningless in the blink of an eye.
It’s this hyper-volatility – normal in all emerging markets – which has given ammunition to the vested interests that denounce crypto. The fact that people can lose their money as fast as they make it impacts the average user and slows down the appetite for crypto adoption. With $600 billion wiped off crypto’s entire market cap in April alone, the bear has certainly come out to mark its territory.
Bitcoin & Ethereum Feel the Impact
BTC and Ethereum lost more than 50% of the value they held at their peak, and sent shudders through the wider crypto markets as they did so. The knock-on effects in the DeFi space are palpable. Although trading fees normally offset losses incurred through normal asset volatility in liquidity pools, the same can not be said when there is such dramatic price movement. Providers to these pools can suffer painful losses as a result.
As such, the Fear and Greed index for crypto market is currently 20 – extreme fear – and although there are plenty of HODLers and optimists for crypto’s future, many fear further downward price action is incoming. As the momentum from the start of the year stalls, Michael Saylor’s talk of a super-cycle isn’t quite so alluring. This is a particular challenge as governments wake up to the fact that crypto is here to stay and are racing to setup regulatory frameworks. In this environment, protecting your crypto from sudden price drops is a tantalising prospect.
Protecting Your Portfolio Is Now Possible
It was the use of collective insurance that allowed the first caravels and galleons to discover the new world. Back then, merchants would band together and engage in liquidity pools that insured against the risk that any given ship would sink when out on the brave new ocean and take all the gold into the depths with it.
Once these insurance collectives were created, it gave lease to the hundreds of expeditions that would eventually chart the unknown world. By empowering various assets to make their voyage with an underlying insurance protocol, it offers hope for a future where investors can support crypto projects with the knowledge they have protection should they fail.
Bumper Finance, a DeFi price protection protocol, promises to protect people’s holdings and deter from the kind of grievous downswings experienced in April. By doing so, they give their users peace of mind, with price floors being set so that fixed prices for assets will be paid out even if the asset price falls below it.
Investors who have reached a certain threshold in their holdings they want to lock in, but nevertheless still want to hold onto their crypto and put it to productive use on the markets, will find Bumper Finance’s offering compelling, as the average 3% premium on a policy is an attractive price to pay for the security.
It also raises opportunities for users to pocket differences by cashing out their policies after a downward movement. Best of all, securing yourself this way does not mean you can’t benefit from asset price rises. As long as the premiums are paid, the Bumper-based version of the asset remains yours to hold or sell as you wish.
The first asset offered on the protocol will be Ethereum. Interest from venture capital has been hot, with $10,000,000 raised from Alphabit, Autonomy, Beachhead, Chainlayer and other firms. The team turned down a further $32,000,000 in funding, with a desire to seek community growth and maximising the opportunity for early adopters to farm more of $BUMP’s 250,000,000 supply for themselves and realize the value of the token organically.
How Asset Protection on Bumper Works
Users providing USDC liquidity are rewarded by the fees from the premiums paid by those protecting their assets. The takers of protection matching the makers of liquidity incentivises both sides of the user base and encourages the ongoing growth of the platform. As it grows, the protocol will be able to protect larger and more diverse asset pools, which in turn will lead to a more impressive yield for those involved.
Inside the Liquidity Provisioning Incentive
Bumper is now launching a liquidity pool provision program, designed to incentivise the ecosystem’s growth, whilst rewarding early backers. To incentivise those participating in the liquidity program and providing the USDC reserves to get the protocol off the ground, Bumper finance is offering early depositors an astonishing 300% APR on funds locked until the 14th October. During that time, early investors will be able to both farm $BUMP and get special access to the private sale of the token before it goes on public sale.
Bumper is targeting $150m TVL, imputing a target token price of $1.80, and a public sale pegged at $2.40. Although you can deposit funds at any time throughout the program through the Bumper dApp, there is a sliding scale of rewards depending on how early in the 12-week cycle a user participates. Proceeds from token sales will be ploughed into stablecoin and prudential capital reserves to bootstrap the protocol.
Bumper Finance markets itself as “God-Mode for crypto”. Certainly, the opportunity to lock in asset value for negligible premiums will be immensely attractive to takers of protection, while the high APR offered on USDC entered into the liquidity program and the chance for early adopters to harvest $BUMP means there will be no shortage of people getting involved. Crypto may be a bumpy ride, but Bumper Finance promises to make it just that little bit smoother.