With the use of User-backed redundancy mechanisms and liquidity pools, bumper.fi promises to create bulletproof price protection. The protocol also features redundancy measures, including a separate risk pool that backs realized losses and cascading tranches of risk dissipation measures. In other words, bumper is a safe, secure investment that has the ability to protect both your account balance and your trading capital. This article provides you with an overview of bumper.fi and outlines its key features and benefits.
User-backed liquidity pools
A liquidity pool is a pot of cryptocurrency assets locked into a smart contract. Its users are called liquidity providers. They can then use the funds to exchange assets, purchase or sell a certain asset, or lend them to another party. A liquidity pool is most commonly used on a decentralized exchange, which is the backbone of the DeFi ecosystem. Decentralized exchanges use smart contracts to let users trade cryptocurrencies. In some cases, the exchange also operates as an automated market maker.
The process of joining a liquidity pool varies according to the platform. On a DeFi platform, users must first connect their Ethereum wallet (such as MetaMask or other Web 3.0 wallets), then deposit their tokens into the relevant liquidity pool. For Uniswap, users must first search for a specific pair and connect their Ethereum wallet. Once they find a pool that suits their needs, they can then deposit their tokens into it.
User-backed redundancy mechanisms
The Bumper protocol employs several user-backed redundancy mechanisms to keep the network resilient against sudden price fluctuations. The system’s near-zero slippage engine ensures that the users can always retrieve their assets and maintains a sufficient reserve-to-assets ratio. In addition, the protocol includes first and second-order risk-dampening capabilities and can be rebalanced via arbitrage bots.
Bumper Finance, a Sydney-based startup, aims to solve a key problem facing crypto assets – price volatility. Bumper uses the innovative DeFi protocol to guarantee that your crypto asset will not fall below a certain price, or rise too much when the market pumps. You simply need to pay a small premium, around 3% p.a., which quickly drops to almost nothing during a rally. Bumper allows you to jump in and out of protection as needed and gradually protects your portfolio.
Bumper policies are protected by strong encryption and data security. The underlying assets are also insured up to a predetermined limit. Bumper will return any amount that you have invested to cover the event of a company going under. Your premiums will be returned to you if the stock market value of a company drops below the limit. If the price floor is lower than the limit you have set, you can redeem the collateral and get your money back.