The rise in DeFi markets over the last twelve months has made the cryptocurrency portfolios of those involved surge in value.
Portfolios that at one time were solely linked to values of underlying assets suddenly began to harvest annual yields for liquidity providers. Early door holders and ambitious investors suddenly found they were in control, and it was their assets that were powering the wider cryptocurrency market, and they, not the institutions – were the ones reaping the rewards that came with it.
Managing One’s Appetite for Risk
There is a risk. Of course, there always was. Yet as the market matures, more DeFi protocols are released, and more people and larger syndicates bring their funds into the game, it introduces a host of risks.
Poorly coded smart contracts from new-fangled protocols can cause funds to vanish overnight, fear over asset prices can lead to liquidity being drained from reliable pools at short notice. This includes high-risk liquidity pools that can become more volatile as yield farmers continue to upgrade their strategies at a high pace.
What’s more, cryptocurrency-holdings are dispersed through an evolving and bewildering array of interconnected – and sometimes disconnected – protocols. Keeping up with the landscape becomes hard, and impermanent loss looms like a shadow over even the safest asset tranches.
Add to this a cryptocurrency market that, after the last three months of consolidation, is primed to either soar upward or crash through a whole skyscraper of price floors. It means the current challenges in the DeFi market for the average investor can feel insurmountable – or simply not worth it.
Although enthusiasts all laugh (and cry) at the swings, with burning house (“this is fine”) memes and glib rejoinders of “first time?” to the newbies, the fact is the impact of that volatility is far more severe on DeFi markets that it is on those simply leaving their cryptocurrency in wallets.
$BUMP it up
Bumper Finance is offering an innovative DeFi protection protocol that promises to take these challenges head-on. By offering price protection on key assets – starting with ETH – users can hold on to their cryptocurrency and have a guaranteed price locked in. What’s more, it doesn’t stop them from deploying their assets in various other secondary pools.
Yields can be safely harvested in the burgeoning cryptocurrency summer in the knowledge that, should winter come again, a guaranteed USDC price can be withdrawn.
Taking a policy is simple enough. The GUI is extremely fluid and well-made. Just enter the asset you wish to protect, and then set the price floor, and your asset is protected. You receive bETH when protecting ETH, which can be redeemed whenever it is sensible to do so. After 2 weeks, you can cancel the protection at any time.
This is, effectively, a DeFi cheat code. By doing so, it protects portfolio value, whilst further propelling the market forward. Bumper Finance might be not just a revolution for the early investors in its liquidity program but also for the entire cryptocurrency market as a whole.
Taking and making
To gain this protection, users pay a small premium, averaging at 3% per annum. This premium is then paid out to the users providing USDC liquidity. With both sides of the protocol incentivized, both cautious takers of protection and ambitious makers of liquidity are going to be happy to participate in Bumper Finance’s protocol.
Liquidity makers farm $BUMP, which will then be used to manage the governance of the protocol as it expands and helps to safeguard larger and larger asset pools. Once it can, it opens the door to Bumper Finance helping even novice retail investors protect their modest holdings, with the endless daisy-chain of yields cascading down towards those who invested their USDC into the liquidity program.
Bumper Finance’s liquidity program launched on July 14. Uptake was red hot with over $4m in deposits within the first 5 minutes. VCs are already falling over themselves to invest, with the Bumper Finance team having to reject $32 million of outside capital in order to preserve more value for its community.
It’s laudable, but also wise. Organic growth is real growth, and the Bumper Finance team is explicitly keen for the everyday user to gain the most rewards from their program. Partly out of confidence in their community, but also because they are aware it’s the surefire way to make the protocol a success.
Early investors in the liquidity program will receive a staggering 300% APR by farming and purchasing the BUMP token in the exclusive private sale. The 300% APR figure is predicated on a modest $150 million TVL target by the end of the program (October, 14). It could, of course, go far higher.
Everyone knows that cryptocurrency’s volatility is its Achilles’ heel. It sours the mood of those who believe and frightens the average investor who was initially intrigued by the superlative gains of the game. Well, games are rigged, and life isn’t fair. Sometimes you need to activate God-mode.
Bumper Finance’s protocol protects your cryptocurrency from price drops and allows users to play the game on their own terms and within their own appetite for risk – without fear that their caution will exclude them from the moon.
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