The BUMP Token: Economic Incentives and Network Effects

Published in
5 min readJul 1, 2021


At Bumper, we know that the simple philosophy of “build it and they will come” just won’t cut it for the project to sustain itself.

Instead, we understand that supporting network effects is the only way to grow, and the best way to achieve this is by properly incentivizing all actors in the Bumper ecosystem. When all stakeholders benefit from the growth of the ecosystem and all users are provided with genuine value, only then can a decentralized network realize any potential for growth and sustainability as an anchor tenant in DeFi.

What is clear from the success of DeFi protocols like Uniswap, Curve, Compound, and others is that economic incentives for platform participants often translates into long-term support which, in turn, catalyzes further growth. Bumper addresses a strong and unmet need in the market. Sharing really is caring! Platform viability through stakeholder utility and/or profit is priority number one.

The first version of the platform, dubbed Bumper 1A, will include USDC deposit functionality and allow users to farm BUMP tokens for the first time. Here’s why you won’t want to miss this opportunity to become one of Bumper’s earliest stakeholders.

Sustainable Growth Requires Both Incentives and Utility

The BUMP token is an integral part of the Bumper ecosystem, and along with the near-zero slippage engine, reserve rebalancing system, and multiple layers of redundancy, BUMP tokens further assist in maintaining the resiliency of the protocol.

The token is woven into every facet of the platform and is the first entry point to the Bumper ecosystem — since both price protection “takers” and liquidity providing “makers” need to deposit BUMP tokens to begin interacting with the protocol.

The key result of requiring BUMP to participate in the Bumper protocol market is that it fundamentally binds the value of the utility of the software with the demand for the token (on external exchange platforms and marketplaces); takers who wish to participate by protecting their assets from price shocks will need to deposit BUMP tokens for the duration of their protection position. Ditto for liquidity providers, who are required to deposit BUMP tokens while contributing to their chosen liquidity pool. This is the utility side of the coin.

On the other side of the coin are BUMP incentives. Both sides of the Bumper protocol micro-economy are incentivized to participate in the form of a gradual BUMP token yield, earned on top of their BUMP deposit. This helps to reward those that interact with the protocol and support early network effects. Bumper has a large reserve of tokens for this purpose, designed to sustain the protocol in the long term. In later releases, BUMP token holders will be able to stake their tokens to help further improve the robustness of the protocol.

As the network grows and matures, the circulating supply of the token will ultimately decrease, which combined with increasing demand, will serve to match the value of BUMP supply with the utility of the ecosystem.

It’s also worth highlighting that Bumper is similarly designed to be governed by the community as a DAO, and the core team will be working hard to add more and more decentralized governance features to achieve this. And so as more and more BUMP tokens are distributed throughout a growing set of protocol participants, these same stakeholders will be able to help shape the future of the protocol and will be best positioned to reap the benefits of the seeds that they help to sow.

Creating Value For All Stakeholders

Many platforms have no way to convert early stakeholders into adopters, and as a result, often end up being destroyed by adverse speculation — which occurs when token holders have no way to extract utility from their assets and instead turn to speculation.

This frequently leads to a cycle where new users avoid using the platform due to the risk of spiraling asset prices, while previous or early-stage investors look to cash out quickly before the market worsens. Unsurprisingly, this then leads to a self-fulfilling prophecy as spiraling crashing market prices force out even dedicated users and make adoption increasingly unlikely.

At Bumper, we believe this challenge can be avoided from the very beginning through the cautious cryptoeconomic design of the token, as well as careful acceptance of early backers. In line with this, many of our earliest investors will be bringing strategic value to the project — helping with networking, marketing, user acquisition, and more both pre-and-post launch.

But more than this, Bumper eschews the old way of doing things with an innovative approach to token distribution. Rather than using a lottery approach or first-come-first-served (FCFS) approach, we will be providing early supporters with a way to get their hands on BUMP tokens at pre-launch rates. This ensures that those most likely to use the platform are the ones that get to share in its success in an attempt to ward off short-term speculators.

We trust that when Bumper makers and takers recognize the value that the BUMP token provides, they will be the ones who in turn keep and use their tokens in the platform — whether that be by taking out a policy, providing liquidity to the protocol, or simply staking. With a healthy ecosystem in which economic incentives for all stakeholders are carefully balanced, we make our best attempt at achieving steadily increasing market demand and thus a volatility-minimized BUMP price.

Getting BUMP Tokens

As we previously touched on in a recent post, we have now concluded our private sale for the BUMP token — securing investments from a wide range of prominent funds and industry players as a result.

On July 14, 2021, the first iteration of the Bumper Protocol will go live with a subset of the planned feature set. This will also provide the first opportunity for early adopters to get their hands on some BUMP tokens as those that provide liquidity to the Bumper Protocol will be able to not only farm BUMP tokens, but will be given the opportunity to swap some of their stake for a sum of BUMP at private sale prices.

For more details on farming BUMP tokens, see our post on the subject.

Beyond this, the next opportunities to buy BUMP will be during an upcoming pre-sale before a final public sale. Dates for these have not yet been set.

About Bumper

Bumper protects the value of your crypto using a radically innovative DeFi protocol. Set the price you want to protect and if the market crashes, your asset will never fall below that price. Importantly, if the market pumps, your asset rises too.

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Bumper protects the value of your crypto using a radically innovative DeFi protocol.