Two main actors are defined by the Bumper protocol: Takers or Makers. This article will discuss price protection and answer the question “What is a Taker?”
What is a Taker?
A Taker is someone who uses Bumper to protect their crypto assets’ price. We call them a “Taker” once they deposit their tokens in the Bumper smart contracts.
What Cryptocurrencies can I Protect?
The first release of Bumper allowed Ethereum (ETH) to be protected. However, the Bumper roadmap expands protection to a variety of coins and tokens and Bumper will eventually become operational across multiple chains.
The benefits of taking protection
Opening a Taker position has many benefits. It provides price protection, which gives you peace of mind no matter what the market does. There are other benefits that you may not have considered.
Did you know that your Bumpered asset can be used as collateral for a loan on another DeFi platform? It also has a set minimum worth thanks to its protection so it will not be at risk of liquidation unlike other collateral assets which use unbumpered cryptocurrency. *
The Bumpered asset that you receive will be tradeable. Because it has a minimal value, crypto users can take advantage of this to provide some security and flexibility. *
*NOTE – Fungibility is not available in Bumper Protocol release 1.
Bumper was created to offer a better alternative to both put losses or Puts purchased through options desks. These can be read more.
How to open a taker job
You will need an asset to protect and enough BUMP tokens to bond the Taker position. (More about this below).
It takes only a few seconds for a Taker position to be opened using the Bump protocol dApp. It’s very simple.
These are the steps:
- Connect your wallet
- Navigate to Protect Tab
- How much crypto do you want to protect?
- Your protection floor should be set
- Select the length of your protection term
- Reexamine and confirm your position.
Set the Protection Floor
The protection floor refers to the level at which your crypto is protected. In increments of 5%, you can select a level between 70% and 95% of the current market price.
EXAMPLE
You want to protect ETH which currently has a value of $3000.
A floor of 90% is chosen to protect you from a price drop below $2700.
Stablecoins will be given to you if your contract expires or the value of your protected assets falls below the floor.
Choose your terms of taker
The term refers to the length of time a Taker chooses to open a position. The term ends and the position can be renewed or closed. There are 30 day increments of up to 150 days (5 month) available for Taker terms.
Notice: A Taker can close their position before the due date, but they will be charged a break fee on the amount that is returned and forfeit their bond BUMP tokens.
Bonding
It is easy to bond. You will need some BUMP tokens to use the Bumper protocol. These tokens must be in your wallet and are kept locked for the duration of your position. They will be returned to you after your position is closed.
The amount of crypto that you want to protect will determine how many BUMP tokens are required to bond a position.
Bumpered Asset
You are given a Bumpered asset (for example, bETH) when you open your Taker positions. This represents your protected asset and has the price floor built into it. This Bumpered asset, another ERC-20 token is also available for trading and can even be used in other DeFi protocols to collateralise loans. (NB: Fungibility is not included in Version 1. However, it will be added to later versions of the Bumper protocol.
The Bumpered asset is guaranteed a minimum value thanks to the protection floor. This means that it is less likely to be liquidated if you use it as collateral for a loan under another DeFi protocol, such as Maker. Bumper makes it even more appealing to protect your assets because of the fungibility of your Bumpered Asset and the built-in protection against price fluctuations.
Premiums and fees
Bumper calculates premiums using a variety of factors. The actual premium paid by the Taker can change during the term depending on market conditions. It is also paid when the position is closed. A small network fee is also charged to Takers when they open a position.
Renewing or closing taker positions
If a Taker position is expired and not renewed, the user must return their Bumpered Asset. They then receive the greater (in USD value) of either.
- They protected their original assets or disposed of them.
- They kept their assets safe at (their floor) with stablecoins.
Bumper’s near-zero slippage engine
Slippage, which is basically the cost of making trades is the difference between ask (buy) spreads and bid (sell) spreads at the time of trade initiation and finalisation.
Slippage is a risky characteristic of crypto because it is volatile and can move very quickly. Sometimes slippage can lead to execution prices being different than intended. This is especially true for exchanges with low liquidity.
Instead of matching Makers (liquidity providers) and Takers (people who want protection), all positions in Bumper can be taken against pools. There are pools for each asset being protected and pools of stablecoins.
This multi-pools model ensures that there is very little slippage in settlements. In effect, Bumper eliminates one of the parasitic risks of crypto trading, particularly when compared to using stop loss.
Conclusion
Crypto market volatility is well-known. Large price swings can and do occur frequently. A double-digit price drop on traditional markets is rare, but it’s often big news. This kind of price action in crypto is quite common.
To protect their crypto against falling prices, Takers have Bumper. We call it “God Mode for Crypto” because it gives you invincibility against extreme volatility.
