Why Trading with Bumper Makes Sense: Upgrades & Trading Strategies

December 20, 2023

In conclusion

Building a unique product for the crypto space can be a gift and a curse. The curse lies in the fact that no matter how special your product is, you can fall victim to a paradoxical market sentiment. Personally, I would like to attribute the struggle of good products to find their market to the ephemeral attention of the space. On the other hand, marketing professionals would describe this ordeal as one of the rigors of finding product-market fit (PMF).

Whatever the case is, I believe that it is not random that the few projects that survive this stint and end up finding PMF are often the ones that take up an agile approach to fixing the issues rather than sticking to an existing formula. Take Trader Joe, for example, a total revamp and redirection saved the day for the AMM, and there are many more examples like this. 

Bumper in this regard is an expert in preemptive planning, with a case in point being Bumper’s important R&D phase and corresponding simulation report. Thanks to a lengthy period of pre-launch stress testing and 10 weeks+ of monitoring since the launch of V1, we know for a fact that the core of Bumper’s approach to price protection works. However, Bumper believes, and we agree as well, that there is a much better approach to attracting desired market participants to Bumper. 

Based on this premise, Bumper is undergoing some changes. In the next few paragraphs, we'll guide you through these changes and show you some potential trading strategies; all of the stuff you could use Bumper for. 

If, by any chance, you haven't grasped what Bumper is and what they do, feel free to refer back to our previous article where we explained the protocol and why we consider its value offering revolutionary in the same category as Uniswap. 

Migrating to Arbitrum

For the 10000000th time, ETH fees are a mess! Yes! And Gwei acting up in a “pre-bull” market only makes you wonder what happens when you try to protect an asset in a full-on raging bull??? That’s not the only reason why moving to Arbitrum makes a lot of sense for a protocol like Bumper, but it surely tops my list. 

A valid argument is that Arbitrum boasts healthy and flourishing liquidity, attracting various derivatives protocols. It's reasonable to expect that some of this liquidity should naturally find its way into Bumper. Holders may consider taking protective positions or supplying liquidity to earn taker premiums. Transitioning to Arbitrum also offers Bumper the chance to seamlessly integrate with these protocols and become an integral part of a thriving ecosystem.

Opening up the door to more assets 

In V1, you could only take protection positions for your ETH, leaving those willing to take advantage of the opportunity Bumper offers, with very limited options. As part of the changes, Bumper will be adding new markets to the mix. They are: wBTC and wstETH from launch with ETH and LINK to be added shortly afterwards. With the wstETH integration, Bumper opens the door to LSDfi, allowing those seeking ETH yields to also take protection positions while earning yield on top. 

Hello tradable price-protected yield-bearing staked ETH, maximise your yield through hedged trading instead of restaking!

In addition to the aforementioned important updates, there will be a change in user experience with the update of the Bumper UI. This update will introduce a trading chart alongside the positions taken on the protocol. It enables protection takers to assess their protected position in relation to the chart, providing a genuine trading experience and enhancing understanding of how Bumper functions as a price protection tool.

Not only will there be trading charts, but protection seekers will be able to see the estimated premiums for the time frame they choose to lock up their assets before they deposit. 

Bumper will also introduce shorter terms; a shift from the standard 30 days term length to a dynamic 7, 14, and 21 days. What this means is that you can protect your assets on Bumper for a shorter period of time. Another new introduction is higher floor prices moving up to 99%, as well as improving flexibility by allowing traders to cancel their positions at any time.  

These changes open the door to various dynamic trading strategies, some of which we will look at in more detail in the next few paragraphs. 

Plausible trading strategies with Bumper 

The initial step in comprehending Bumper's functionality is to view it as a superior alternative to employing stop-loss on a DEX or CEX. For instance, if you hold ETH purchased during a dip and the charts indicate further downside risks, using Bumper becomes a safeguard by taking a protection position. To execute this, deposit your ETH, specify a price floor (Bumper now offers up to a 99% price floor), and choose a term length (7, 14, 21, or up to 30 days). 

If the ETH price drops below the protected level, your assets remain secure, and you can even profit if the price rises. Likewise, it can work as an accumulation strategy, hedging your asset and buying more when it dips using the USDT paid out at the expiry of your position’s term. 

Using Bumper for competitive yield: 

Another trading scenario involves being a liquidity provider on Bumper. Deposit your USDT into any of the specified markets (wstETH/USDT, wBTC/USDT, ETH/USDT, LINK/USDT,) to potentially earn an estimated 3-18% in yield.  Bumper achieves competitive yields by offering additional token incentives. Liquidity providers on Bumper play a crucial role by assuming the risks of depositors and earning the premium paid by protection seekers.

Secure your profits using Bumper: 

Bumper offers numerous versatile applications that all make perfect sense. Let’s consider a scenario where you've acquired an asset that experiences a 500% increase from your purchase point, resulting in a 5x return. There's a likelihood of a substantial downward correction. With Bumper, you can secure your gains by taking a 99% protection position on the asset. This ensures your profits in case of a correction, with a minimal premium, while allowing continued exposure if the asset maintains its strong performance or in degenerate lingo, continues printing hard.

But wait, there's more! Our task is to unleash the inner degen in you and demonstrate why Bumper deserves your attention. 

Two positional play:

If you're daring enough, you might be wondering how to maximize Bumper's potential while safeguarding your asset. It's straightforward – open two positions or play both sides of the market. Open a protection position for your asset and a maker position to simultaneously earn yields. The yield, derived from assuming the risks of protection seekers, covers the premium on your protected asset.

Accumulate stETH: 

One more way you can leverage Bumper to trade up your assets is through a strategic accumulation like we mentioned earlier but this time using stETH. Typically, stETH is a yield-bearing asset that can potentially generate additional yield through restaking protocols. Bumper allows you to achieve this more efficiently by safeguarding your stETH position and purchasing more when the stETH price falls below your protected position. This approach proves more lucrative than leaving your stETH consistently exposed to downward volatility, yielding only 2-4% or potentially even negative returns if the price of stETH drops significantly such that the yield becomes insignificant. 

Thoughts 

With the recent enhancements to Bumper, the protocol is poised to thrive and attract more users who recognize its potential utility, particularly in the efficiency it offers during a bull market.

In a bull market, characterized by higher highs and higher lows representing corrections, price-locking emerges as a prime use case for Bumper. The updated UI, displaying asset trends alongside your protected position, further solidifies Bumper as a powerful market tool alongside the likes of GMX, Vertex and Pendle. 

In celebration of Bumper going live on Arbitrum, Bumper has provided traders with exclusive incentives: 

  • $0 Trading Fee: Enjoy trading with zero fees for a limited time 
  • No BUMP Bonding: The requirement to bond BUMP tokens has been temporarily suspended
  • Up to $25 Premium Rebate: Takers receive premium rebates in weekly epochs

As Bumper continues to evolve, we anticipate uncovering additional trading scenarios along the way. Frankly, this is evolving into a protocol for everyday use with shorter terms. Nonetheless, you’ll have to show your technical analysis prowess to maximize the potential that Bumper offers. That part is left to you.

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