To trade and protect on Bumper you're required you to open a 'Hedge' position. This is a position with a specified amount of an asset, a set floor price and a term. How you choose these parameters will depend on your approach and strategy.
If you're after long-term peace of mind on your asset and just want reassurance that your downside is protection you might choose a longer term and a lower floor. If you're looking to take out consecutive trades and profit from market movements you might choose a higher floor and shorter term.
In order to open a hedging position or also known as a protection position using Bumper, you need to commit the asset you wish to protect to the smart contract, and bond some BUMP tokens. Here are the basic steps to follow:
Select the Market you would like to open a position in
Ensure ‘Hedge’ is selected in the new position box
Under Asset Position, decide how much of your available assets you want to protect, or click the Max button to choose all (note, if you’re depositing ETH you will need to keep some ETH in reserve to pay gas fees).
Next, set a floor. This is the price that your protection engages
Now choose a protection term. This is how long your position will be open for. Note: You can cancel at any time, but doing so will mean you won’t earn BUMP incentives.
In the summary box you will see:
an Estimated Premium for your position. The Estimated Premium is shown as a per month (p/m) %
the required BUMP token bond. This is the amount of BUMP tokens you must have in your wallet which are bonded into the protocol. Your bond is returned when you exit your position.
the trading fee for using Bumper
an estimated incentive paid in BUMP tokens for using the protocol.
If you’re happy, and ready to proceed, you may be shown a ‘PERMIT’ button if this is your first transaction
If you’ve submitted a PERMIT you can then select ‘CONFIRM’ to open your web wallet and complete the transaction
Now approve the transaction in your web3 wallet, and then wait for it to be confirmed on the blockchain
Once completed, you’ll see a confirmation of your transaction pop up, and you will see the new position in your ‘Positions’ summary.
HOW TO EXIT A POSITION
There are several ways to exit your Bumper hedging position depending on whether you’re in a fixed term and whether the value is above or below the price floor.
If you’re within a fixed term, indicated in your position summary by a countdown timer, you can close your position at any point.
Closing your position while in term will return your original asset, irrespective of whether the value is above or below your price floor. You will also forfeit any BUMP token incentives earned during the term. You will be charged a prorated premium, calculated over the period the position was open.
To close your fixed term position follow these steps:
Navigate to the Bumper dApp ensuring your wallet is connected
Select the Market where the position exists that you would like to close
Find the position in hedging Positions summary and click the ‘Close’ icon
In the pop up window you will be shown:
the position amount which you are closing
the estimated premium for the term of the position
the trading fee
your total estimated payout with the relevant fees included
the bond amount which will be returned to your wallet.
you won’t receive any BUMP token incentives for closing a position early
Select ‘CONFIRM’ to open your web wallet and complete the transaction
Now approve the transaction in your web3 wallet, and then wait for it to be confirmed on the blockchain
Once completed, you’ll see a confirmation of your transaction pop up, and the position will be removed from your dashboard
Close your position outside of a fixed term
Once your fixed term has ended your options to close the position will depend on whether the position is above or below the price floor. Instead of exiting at the end of your term, you can also choose to renew your position.
Closing above your price floor
To close when above your floor price follow these steps:
Navigate to the Bumper dApp ensuring your wallet is connected
Select the Market where the position exists that you would like to close
Find the position in the hedging Positions summary and click the ‘Close’ icon
In the pop up window you will be shown:
the position amount which you are closing
the estimated premium for the term of the position
the trading fee
your total estimated payout with the relevant fees included
the bond amount which will be returned to your wallet.
your estimated BUMP token incentives for participating in the protocol
Select ‘CONFIRM’ to open your web wallet and complete the transaction
Now approve the transaction in your web3 wallet, and then wait for it to be confirmed on the blockchain
Once completed, you’ll see a confirmation of your transaction pop up, and the position will be removed from your dashboard
Claim below your price floor
To close when above your floor price follow these steps:
Navigate to the Bumper dApp ensuring your wallet is connected
Select the Market where the position exists that you would like to close
Find the position in the hedging Positions summary and click the ‘Close’ icon
In the pop up window you will be shown:
the original position amount in the deposited asset
the claim amount based on your chosen floor in stablecoin
the estimated premium for the term of the position
the trading fee
your total estimated payout with the relevant fees included
the bond amount which will be returned to your wallet.
your estimated BUMP token incentives for participating in the protocol
Select ‘CONFIRM’ to open your web wallet and complete the transaction
Now approve the transaction in your web3 wallet, and then wait for it to be confirmed on the blockchain
Once completed, you’ll see a confirmation of your transaction pop up, and the position will be removed from your dashboard
Renew your term
If your position ends above the floor, you have the option to renew your protection.
Renewing allows you to set a new floor and term. Fees and premiums which have been accrued to date will continue to accrue and will be paid out when you finally close or claim on your position. To renew your term, simply click on the Renew button on the associated position. Now set a new term and floor, and then confirm as before.
