Bumper CEO on protecting crypto at a price floor for as little as 3% a year

Ashton Addison: What is Bumper, and how did you arrive at this solution?▶ 00:40

Jonathan DeCarteret: Bumper has one objective: to protect the price of your crypto assets. The story started about a year ago, when we saw DeFi emerging and decided to pivot our existing business. We asked how we could use this ecosystem to solve some of the biggest problems, and we started with the trickiest one, volatility. Here's the simplest way to explain it. Say you own a bitcoin and the price shoots up to $60,000. You think that's toppy, so you protect it at $60,000. If bitcoin falls through that floor, you're swapped into a stablecoin, and you can redeem at the $60,000 value. If the price recovers back above $60,000, you're swapped back into bitcoin. You get the downside protection and the upside gain. The problem is that, done naively, it doesn't work. We modeled it using hourly, minute, second and tick data, and slippage, AMM fees and gas costs combine to wipe out the underlying asset, especially when the price is oscillating along its floor. So we worked with Block8, the company that designed and delivered Haven, and together we built a near-zero slippage engine. That sits at the heart of Bumper.

Ashton: How is this different from a stop-loss, or from buying options?▶ 03:41

Jonathan: A stop-loss is a one-way ticket. If the market dives, you're cashed out of your position. There are also a lot of bots gaming these movements, pushing you out of your position and then buying the dip very quickly to get the rebound. The other option is an options desk, and that technology has been used in traditional finance since 1973. It's almost 50 years old, and it's unbelievable that nothing more efficient has come along. Options desks are clunky, expensive, have fixed expiry windows and are complex. Our thesis was that DeFi is so fluid, automated and natively smart that we can do things you just can't do in traditional finance. With Bumper, in six clicks you set the price you want to protect, you hit that button, and that's it. You can be protected for as little as 3% per annum. That's $30,000 a year to protect a million dollars' worth of bitcoin, which is pocket change.

Ashton: Is simplicity your biggest competitive advantage in driving long-term adoption?▶ 06:12

Jonathan: For sure. Once we figured this out, we wanted it to become a retail product first. Hence the name: Bumper is friendly and accessible, not scary. The scoping and architectural design took us nine months, and we worked with designers on the dapp at the same time because we wanted it to be really easy to use. The first part of the protocol launches in three weeks, on June 22, and you'll see how intuitive the interface is. In a lot of DeFi protocols it isn't, and I think that's partly on purpose, for the geeks among us. Bumper is made for the masses. There's also a massive play for professional crypto traders who have a fiduciary responsibility to take some kind of hedge. And there's a big opportunity in the inter-DeFi play, where a Yearn ETH vault, for example, is protected at a certain price so it can never drop below it. We're trying to position ourselves as the default protection Lego block that plugs into other DeFi protocols, retail and institutions.

Ashton: What role does the BUMP token play, and does it create a sustainable ecosystem?▶ 08:54

Jonathan: We're careful and considerate designers of protocols and tokenomics. From the first design layer we thought about every use case for the token and how to feed value back into it. Any user needs to deposit BUMP into the protocol to start using it. If you're a protection taker, you can opt to pay your premium in BUMP. If you've put USDC into the protocol to provide protection, you can elect to receive your yield in BUMP. Every actor in the protocol receives a daily distribution of the token to help bootstrap network effects. We're also finishing a model that lets people who hold a significant amount of BUMP stake it to make the protocol more robust and efficient. And BUMP is the governance token. This is a DAO by design, and it will move quickly to community governance. That's about five or six utility cases that we think will sustain the token price and its utility.

Ashton: What's included in the first release on June 22?▶ 10:48

Jonathan: We have a phenomenal team of coders and developers, which is difficult to find when the market's pumping. On June 22 we release the first part of Bumper, which lets people deposit USDC into the protocol. Depositors can expect an APY of 400% paid in BUMP tokens, running until mid-September, when the second part of the protocol comes out and the whole thing goes live. Depositing USDC on June 22 also lets you convert some of that USDC into BUMP at essentially a private sale price. Towards the September launch we'll hold a presale, open only to people who deposited USDC, so they can buy BUMP before the public sale and exchange listings.

Ashton: How are you making sure backers are in it for the long term?▶ 12:28

Jonathan: This is a protocol that's going to be around for 10 years plus, so we're only interested in people who want to support it over the long term. That's reflected in our vesting schedule. We ran an institutional round in March. We hoped to raise half a million dollars and raised $11.3 million in a month, and we declined a further $32 million of investment. All of those investors and VCs, along with the team and the founders, are locked into an 18-month vesting schedule. That speaks volumes about the long-term view we and our stakeholders have.

Ashton: What will be the key factor in Bumper's success a decade from now?▶ 13:40

Jonathan: Over the last 10 to 20 years, fintech has taken traditional finance and automated it around the edges, making it easier to use, but nothing fundamental has changed in the plumbing. DeFi will just eat traditional finance from the inside out and totally replicate it. We're starting to see the beginnings of that, the flint of a revolution in how financial instruments and structured products interact in an ultra-efficient way. Where we see Bumper is leading that innovation curve.

Ashton: What does Bumper's roadmap look like beyond the first release?▶ 15:23

Jonathan: At the moment this is a DeFi play, starting with just ETH and USDC as the pairs. Release two, coming in Q4 this year, is about expansion. On the unstable asset side we'll extend to the larger-cap ERC-20 tokens and wrapped bitcoin. On the stable side we'll have multi-denominated stablecoins, from USDC to DAI. We could have one really big stablecoin pool with lots of unstable assets balanced against it, which makes it super efficient. We're also looking at interoperability with other chains, such as Binance Smart Chain, and at layer two mechanisms to speed things up. Beyond that, we could take traditional equities like Tesla, tokenize them and then bumper them. In borrowing, if you deposit ETH as collateral, it's liable to be liquidated. If you're bumped, that's impossible, because the protocol will always stand by the floor you're protecting. We could also create an institutional version of Bumper with a KYC/AML filter on each end, so everyone knows they're dealing with qualified entities. Then there's nothing to stop us taking any bond, stock, equity or derivative in traditional finance and bumpering it.