.png)
The cryptocurrency market is a rollercoaster of highs and lows and while the potential for profit is immense, so too is the risk of significant losses.
Traditional financial instruments like options can offer some level of protection, but they often come with a steep learning curve that many find daunting. Enter Bumper, a decentralised finance (DeFi) protocol that offers a simpler, more efficient alternative for risk management, particularly during bullish market conditions.
Options trading is a sophisticated financial strategy that allows investors to take strategic positions on market movements. Options are commonly used for hedging risks, speculating on future prices, and managing investment portfolios, and come in two basic flavours: calls and puts.
Call options and put options are financial derivatives that give investors the right, but not the obligation, to buy (in the case of a call) or sell (in the case of a put) an asset at a predetermined price within a specific time frame.
A call option grants the holder the right to buy an asset, usually a stock, at a set price before the option expires. It's generally purchased with the expectation that the asset's price will rise, allowing the investor to buy it at a discount.
On the other hand, a put option gives the holder the right to sell an asset at a predetermined price. Investors buy put options when they anticipate that the asset's price will decline, enabling them to sell it at a price higher than the market value when the option is exercised.
Understanding the intricacies of options requires a considerable investment of time and effort, making it less accessible for the average crypto enthusiast. In fact, whilst the options market in the tradFi world is gigantic, in the crypto world, options have not really enjoyed the same level of popularity.
Partly, this may be because options desks are too complex, but there are other factors too, including that crypto options platforms generally do not allow you to exercise your option, and instead are purely cash settled.
Bumper offers a straightforward approach to risk management without the complexities associated with options trading. Here's how it works:
For those interested in earning a yield, Bumper allows you to provide liquidity in the form of USDC. You earn premiums paid by protection takers, offering an opportunity to earn passive income.
During a bull run, asset prices can skyrocket, but they can also plummet just as quickly. Bumper allows you to lock in your gains by setting a floor price, ensuring that you won't sell below a certain value even if the market takes a downturn. But if the market continues to ride upwards (even if it's fallen below your floor price multiple times), you still get to enjoy the gains.
Bumper is incredibly easy to use, and doesn't require you to undergo any ID verification. Just connect your Web3 wallet (e.g. Metamask) and you're good to go. When opening a position using Bumper, it takes literally 6 clicks to get protected from downside volatility, and there's no complex maths to work your way through. Just choose a floor price and a term, and then verify the transaction in your wallet and that's it.
Bumper has been shown to be approximately 30% cheaper than traditional options platforms like Deribit. This cost-efficiency is particularly beneficial during a bull market, where every percentage point of profit counts.
With Bumper, you don't need to be a financial expert to protect your assets. The protocol's smart contracts handle all the complexities, allowing you to focus on what you do best: investing in crypto.
Bumper offers a unique solution for crypto investors who want to manage risk without delving into the complexities of options trading. Its user-friendly interface, simplicity and cost-efficiency make it an ideal tool for safeguarding your assets, especially during a bull run. If you're looking for a dead easy, yet effective way to navigate the volatile crypto market, Bumper is the protocol you've been waiting for.
Disclaimer:
Any information provided on this website/publication is for general information purposes only, and does not constitute investment advice, financial advice, trading advice, recommendations, or any form of solicitation. No reliance can be placed on any information, content, or material stated on this website/publication. Accordingly, you must verify all information independently before utilising the Bumper protocol, and all decisions based on any information are your sole responsibility, and we shall have no liability for such decisions. Conduct your own due diligence and consult your financial advisor before making any investment decisions. Visit our website for full terms and conditions.
In this article, we compare using Bumper with Put Options and examine its advantages for DeFi traders wanting to trade volatility with more flexibility.
