You might already know Bumper as the leading DeFi price protection platform, but did you know you can also earn money through Bumper too? You can do this by being a liquidity provider (LP), which essentially means lending your coins to the platform and getting paid for it, making Bumper a kind of crypto savings account that earns you interest. There’s much more to it than that, so sit back, relax and let us tell you how Bumper can make your crypto work for you. It will be painless, we promise!
What Are Liquidity Pools?
Being a Bumper LP means that you can earn a yield from the platform, making money from the premiums paid by those taking out protection. For some people this is enough, given that the interest rate is far higher than the banks are offering, but the beauty of Bumper is that you can do more than just spend or save your earnings — of course you could cash it out and hit the shops, but you could also reinvest it into the liquidity pool or even send it to a secondary protocol for an extra dividend.
If you’re new to the concept of liquidity pooling then this article will give you a brief rundown on the principles of the process, but if you’ve already spent some time swimming in liquidity pools or out there working the yield farms then you might be more interested in the nuts and bolts of being a Bumper LP, which we explain a little later.
First though, the basics. Liquidity pools have become the go-to method of providing liquidity for decentralized crypto protocols. Anywhere one token is swapped for another in a decentralized manner, an LP has to be there to provide the funds being traded. In centralized exchanges this is down to the exchange itself and market makers employed by the exchange, but in a decentralized model (like Bumper) it comes down to individuals to fulfil this role (and potentially market makers employed by specific projects).
Liquidity pools came about because the traditional order book system didn’t work for the DeFi model — the fees were too high and the processing time too slow to operate the standard exchange mechanism. Liquidity pools have become the premiere solution for exchange projects in the DeFi space, offering continuous, automated liquidity, and earning LPs a nice sideline into the bargain.
Why Should I Be a Liquidity Provider?
You might have guessed this already, but the primary benefit of being an LP is that you get paid for it. Of course some will get a kick out of knowing that they are helping further the cause of decentralized finance…but most are in it for the payday. And why not.
With Bumper, LPs are required to fill the liquidity pool to counterbalance those wishing to protect their assets, providing an essential service. The beauty of the pooling system is that LPs can pool as much or as little of their assets as they like, and with Bumper you can remove your tokens after just a couple of weeks if you want to. Once you’ve left the pool you’re free to sell your tokens (and your interest), or you might want to grab a piña colada and hop back in the pool again. The whole thing is performed through smart contracts so the process is instant and has no middle man complicating things.
If you decide to leave the pool you just redeem the bumpered tokens from the protocol and Bumper returns your original stake plus accrued interest back into your wallet. What could be simpler?
Why Should I Choose Bumper?
Those that have been in the crypto and particularly the DeFi space for a while will know that there are many places where you can put your stablecoins to work, but Bumper is different. The protocol benefits everyone who interacts with the platform, with both LPs and Bumper policyholders being rewarded and opportunities to compound those earnings.
As a Bumper LP you will fill the liquidity pool with one or more of the tokens supported on the platform (initially USDC), getting an equal amount of Bumpered tokens in return (e.g. bUSDC). This is a fungible yield-bearing token, pegged to the relevant fiat currency (in the case of USDC, the U.S. dollar), that you can trade just like any other cryptocurrency, and the number of tokens you receive (your ‘yield’) will grow in accordance with how much collateral you put in and how much the platform is being used — the more liquidity you provide, the more interest you get.
If that wasn’t enough, you can even send the tokens you have earned to other protocols (for example YEARN) and claim a secondary yield, in addition to the money earned from the floating premiums paid by those taking protection (‘Takers’). This is known as ‘yield farming’. The cherry on the cake is that Bumper will also reward all users with native BUMP tokens which can be held or sold as desired, making three ways in which you can earn interest off your stablecoins through being a Bumper LP. That beats the 0.6% per year from your bank, right?
How Do I Provide Liquidity to Bumper?
Providing liquidity to the Bumper protocol couldn’t be easier. Simply access the Bumper protocol and connect the wallet containing your stablecoins (e.g. MetaMask). Then head to the ‘Earn’ page, which will automatically showcase the tokens in your wallet that are supported on the Bumper platform for deposit, as well as the APY associated with each one.
When you’re ready to deposit, simply choose the asset you wish to supply, hit ‘deposit’ and set the amount and other parameters. Once you have set these parameters you will be provided with an estimated weekly yield, but don’t forget you can still deploy your bUSDc tokens elsewhere for an increased gain on top of that figure.
When you’re happy with how everything looks, hit ‘Next’ and you’re away.
Congratulations, you are now a Bumper liquidity provider!
Hungry For More?
We designed Bumper so that it would be an attractive proposition for anyone interacting with the platform, and with the opportunity to earn money in three different ways we reckon we’ve done that. For more information on the Bumper liquidity pool mechanism, or to ask any questions regarding it or any aspect of the Bumper protocol, head over to our Telegram channel where our team will be happy to help and advise.
Check out the website: https://bumper.fi
Follow us over on Twitter: https://twitter.com/bumperfinance