The Easy Option: Why crypto Options protocols might have a bit of competition
If you’re fairly new to crypto, right now, I feel for you. For those of us who’ve been active for many years (this is not the first bear market for many of us), it’s challenging enough to make sense of 2022 in the cryptosphere.
So, we can only imagine what it’s like for newbies to crypto or even those who are considering getting into the space for the first time.
Right now, if you follow any of the myriad crypto publications, influencers or articles in the mainstream and independent media, it’s tough to figure out whether investing in crypto right now is going to wipe out your investment or make you a gazillionaire.
Whilst some are predicting Bitcoin to start a new journey to the moon, others, including some pretty big names in finance, are convinced the bear market is far from over, and Bitcoin is going to as low as $5,000!
So what to do? Should you YOLO your life savings (ok, maybe not the best idea, and for clarity, nothing in this piece is financial advice), or hold off and see where the land lays?
Of course, if you wait, and the crypto market has indeed hit its bottom, then you could be missing out on some serious gains. But nobody wants to be holding bags if the price has another -70% downside move coming soon.
So what do you do? If you’re long on crypto and feel that it’s only a matter of time before the space sorts itself out, and demand starts to pop again, then you might be tempted to accumulate, but still want to hedge against downside volatility.
Hedging with Options
In the past, sophisticated traders at this point head for the Options protocols, and the cryptospace has seen a number of these pop up over the last few years.
Some of course are built into the most popular crypto exchanges such as Binance, but there are others which have emerged in the DeFi space.
The challenge is that Options aren’t easy, and if you’re still trying to wrap your head around crypto, it’s more than likely it’s going to take you a while to get your head around how they work, and all the meaning of the ling: Puts, Calls, Condors, Strangles and other weirdly named strategies.
Not sure what Implied volatility is? Too bad, Rookie, unless you’re taking a blind punt, you’ve a whole heap more studying to do.
Confused by Delta? Yep, again, time to add something else to your reading list before you can really give yourself any kind of an edge in the Options world.
And, in case you didn’t realise, you aren’t really protecting your crypto, but rather making bets on volatility and price movements, meaning you’ll have to find some capital from somewhere to actually open your position in the first place.
Man, it’s complicated,! It’s really no wonder that a tiny percentage of crypto holders even bother looking at Options.
Enter Bumper — Easier than Options
Protecting your crypto from price dumps and market crashes needs to be simpler, especially for those who are new to crypto.
This is where Bumper comes in. Bumper lets holders of crypto protect their tokens — their actual tokens — from downside volatility, with only three things you need to decide:
- How much of your crypto to protect
- At what price do you want to be protected
- How long for
That’s it. Once you’ve answered these three very simple questions, you simply click one last button and commit your tokens to the protocol, and you’re protected if the price ends up below the floor.
Conversely, if it goes below the floor and bounces back up again, well, you’re fine, you’ll just simply be able to leave with your tokens (minus the premium you’ll pay) when the position is closed.
No Greeks, no maths, no weird strategies with odd names. Just protect, and go get a good nights sleep, safe in the knowledge that whatever happens, you’re gonna be just fine.
So, how much does it cost?
Well, that rather depends. Bumper doesn’t give you a price for protection up front. Rather, premiums are calculated dynamically, based not on how volatile the market has been previously, but on how volatile it is during the course of your position being open.
In this, you can be assured that you’re always paying a fair premium for your protection, and the users who’ve effectively underwritten your protection are earning a fair premium for the risk they’re taking on.
All of this is dealt with by the protocol’s smart contracts, and you never need to put your tokens on an exchange (Not your keys, not your crypto, remember).
Protect your crypto, and still get to benefit from it
Even more, with Bumper, you receive a tokenised asset — called a Bumpered Asset — which represents your protected coins and tokens.
This can be utilised in other DeFi protocols, effectively representing your protected asset (e.g. ETH), but with the downside volatility removed at a certain floor level. Imagine being able to finally get into using DeFi protocols with little or no risk of liquidation, regardless of where the market goes next.
Join Us in a DeFi revolution
If that all looks good to you, and you’d actually value real crypto price protection, then we highly recommend you slide into our community Discord server to learn more.
Not quite ready yet? No problem. Follow us on Twitter, and learn more about Bumper here, and you can check out our super simple Flashpaper, which basically explains how the protocol works.
