Bumper aims to solve crypto wallet volatility

Serial entrepreneur Jonathan DeCarteret started his first business at the age of 13 with a passion for working at the cutting edge of regulation and technology. Its efforts have resulted in a medley of companies such as:

  • Switch: An advertising aggregator, which has become the UK’s 60th fastest growing company
  • Launching ramp: One of the first real estate crowdfunding platforms.
  • Smile train: American charity launched in UK which became one of the top 20 charities.

The backstory

DeCarteret has made its way into crypto and has started to tackle one of the main issues in that space – volatility. According to DeCarteret, in particular, DeFi lured him and his business partner, Gareth Ward, into space.

“The beauty of programmable, frictionless, automated money is irresistible. We started to imagine all kinds of new financial instruments and wondered if this brilliant new ecosystem could solve some of the biggest problems in the financial world, ”says DeCarteret.

Previously, DeCarteret worked on a crypto project called INDX. He says that while the project was innovative, it was too far ahead of the curve and riddled with regulatory uncertainties.

“But we have been hit by the volatility. There are solutions, but they are clumsy. People use things like stop-loss, but it kicks you out of the market if a candle goes out. Traditional markets use an options window – first introduced in 1973, and it is an old and inefficient system.

The project hits a brick wall

Bumper was born to solve the volatility of the crypto wallet. But theory and practice don’t always agree.

DeCarteret sheds light on this: “Okay, you own a bitcoin and you’ve seen it hit an all-time high of $ 60,000. What if you could use something like Bumper to protect that price, and if it fell below that, Bumper would trade you for a stablecoin? So you can cash out. Then, if the price rose again and exceeded your floor, Bumper would give you back in bitcoin again. Presto.”

Only that was not the case. There was a fundamental flaw in this premise. As the team built models to examine this theory, they realized that Bumper was swapping the user in and out of stablecoins, resulting in transaction costs, gasoline charges, and a slip.

“You don’t get the price you want – it all happens too fast and too often, so you are wasting money in this dance, especially if your assets are hovering along their bottom.”

Modification of the original Bumper model

Sam Brooks was the critical economic architect of the Havven Protocol. In 2018, the protocol was independently integrated into Synthetix and is now one of the most important DeFi Protocols in the world.

Synthetix supports derivative tokens through Synths and provides exposure to a range of assets. Synths trade with infinite liquidity and zero slippage taking advantage of the unique common guarantee of the Synthetix protocol.

Brooks looked at the original Bumper model and found that Bumper solved the right problem (volatility) but in the wrong way. Brooks realized that Bumper had to fix the “slippage”.

Brooks then set out to design a near-zero slip engine, which solved the volatility problem, and it is this intellectual property that is now at the heart of Bumper.

How does the new zero slip motor work?

Bumper groups a group of people into a pool that contains many different price floors. It could be hundreds, thousands or hundreds of thousands of people all simultaneously protecting their crypto. There is also a large pool of stablecoins.

The Bumper Protocol examines the two pools through the lens of six specific ratios designed by Brooks. If the price of crypto, say Ether (ETH), starts to go down, the protocol can rebalance this by attracting more stablecoin deposits or trading ETH for more stablecoins.

Protectors pay a small scheduled daily fee of around 3% per year for this protection, and manufacturers (the people providing stablecoins) get rewards from this pot.

The actors of the Bumper protocol, the people who wish to protect their crypto, are called “protection takers”. Then on the other side are the people, the “manufacturers” of protection, who file USDC and earn significant interest, typically between 7.5% and 12.5%.

Users can also earn the native bump token – an incentive for both takers and manufacturers who distribute daily. DeCarteret says Sam tested this concept with college professors and used a process called “agent-based modeling” to audit it.

How does the bumper work?

A user logs into Bumper and logs in their wallet. He can see the assets in the portfolio, select the ones he wants to protect and set the floor price. This brings up daily premium charges and the user presses the confirm button.

Bumper and fungible packaging

While the tokens are balanced, Bumper issues bETH – a fungible and tradable called Bumpered Ethereum. This ensures that the price value of ETH will never drop below the protected floor.

When you return your bETH and trade your ETH, and if it’s below the floor, users are given USDC to bring them back to their price protected floor.

Other than an initial two-week contract, there are no withdrawal penalties and the protection becomes a rolling contract if users wish to continue using it.

Bumper, DeFi and cross-chain interoperability

The bumper allows other DeFi Products to “plugin”, and this is where DeCarteret sees the possibility of exponential growth.

“Lending sites can come in and offer secured debt positions that cannot be liquidated due to predetermined price protection floors. We offer plug-and-play for other protocols with easy entry and exit movements. There are a large number of utility cases for this.

Over $ 25 million invested in their LP program and $ 3.75 million raised during the symbolic presale

In March of this year, the team wanted to raise half a million dollars to build the MVP and were oversubscribed, raising $ 11.3 million from investors.

The team used the initial funding to build the Maker half, where people could drop off the USDC, and deployed it on July 14. According to DeCarteret, “The absorption we’ve seen has been phenomenal, and two months later when the LP program closed, there was over $ 25 million in play in our cash pool. ”

“We have an underground audience and real support from our community. The people who have staked their USDC now receive their daily bump tokens. They were also able to convert 20% of their stake into BUMP, which most of them did.

Since its inception, demand for the BUMP token has been substantial; the most recent event was the presale which concluded on October 21. Bumper raised $ 3.75 million from early supporters and adopters of the project. The next opportunity to buy BUMP will be at its private sale later in the year.

About Larry Noble

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