Hedge - Open a position

How to open a hedging position

In order to open a hedging position using Bumper, you need to commit the asset you wish to protect to the smart contract, and bond some BUMP tokens. Here are the basic steps to follow:

  • Navigate to the dApp and ensure your wallet is connected

  • Select the Market you would like to open a position in

  • Ensure ‘Hedge’ is selected in the new position box

  • Under Asset Position, decide how much of your available assets you want to protect, or click the Max button to choose all (note, if you’re depositing ETH you will need to keep some ETH in reserve to pay gas fees).

  • Next, set a floor. This is the price that your protection engages

  • Now choose a protection term. This is how long your position will be open for. Note: You can cancel at any time, but doing so will mean you won’t earn BUMP incentives.

  • In the summary box you will see:

    • an Estimated Premium for your position. The Estimated Premium is shown as a per month (p/m) %

    • the required BUMP token bond. This is the amount of BUMP tokens you must have in your wallet which are bonded into the protocol. Your bond is returned when you exit your position.

    • the trading fee for using Bumper

    • an estimated incentive paid in BUMP tokens for using the protocol.

  • If you’re happy, and ready to proceed, you may be shown a ‘PERMIT’ button if this is your first transaction

  • If you’ve submitted a PERMIT you can then select ‘CONFIRM’ to open your web wallet and complete the transaction

  • Now approve the transaction in your web3 wallet, and then wait for it to be confirmed on the blockchain

  • Once completed, you’ll see a confirmation of your transaction pop up, and you will see the new position in your ‘Positions’ summary.

Deposit Limiting There are times when the protocol will need to limit deposit sizes for both Makers and Takers in order to keep pool ratios within predefined limits. This helps to ensure that premiums are fair, healthy yields are maintained and the protocol can operate most efficiently. If the deposit alert shows while trying to open a new position reduce the size of your position

Premiums and Fees

There is a cost for protecting your crypto assets from downside volatility, and this is calculated throughout your term. See the section on premiums for more details.

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