Bumper Docs
bumper.fiDiscordForum
  • Learn
    • What is Bumper?
    • Documentation Structure
    • Why Use Bumper?
      • Comparison with stop-loss
      • Comparison with options
    • BUMP Token
      • Overview
      • BUMP Token Ecosystem
        • Design Background
        • Token Utility
        • Token Network
          • Network Bond (Primary Utility)
          • Network Incentive (Primary Utility)
          • Representative Governance (Primary Utility)
          • Network Boost (Secondary Utility)
          • Staking (Secondary Utility)
        • Roadmap
        • Token Metrics
          • Token Details
          • Token Emission
        • DAO Governance
          • Current Status
          • Future Status
    • Staking
    • Guides
      • Connect a wallet
      • Hedge - Open a position
      • Hedge - Exit a position
      • Hedge - Renew a position
      • Earn - Open a position
      • Earn - Close a position
      • Earn - Renew a position
      • dApp Interface
        • Dashboard
        • Hedge Positions
        • Earn Positions
      • Risk Rating
      • How do I add my BUMP to Metamask?
      • How do I add my bUSDC token to MetaMask?
      • How to buy BUMP on Uniswap
      • Liquidity Mining
        • How to Participate In Bumper’s Liquidity Mining Program - A step-by-step guide
      • Troubleshooting
      • Use cases & strategies
      • Legacy Guides
        • How to unstake & claim rewards from legacy staking
        • Claiming vested BUMP tokens
        • Withdrawing liquidity from Bumper's legacy LP program
        • Claiming BUMP tokens for Public Sale Participants
    • Protocol Risks
      • General risks
      • Taker liquidations
      • Maker liquidations
    • Premiums and Yields
    • FAQs
    • Troubleshooting
  • Protocol
    • Overview
      • Preliminaries
      • User Positions
    • Premium
      • Price Risk Factor (PRF)
      • Liability Risk Factor (VRF)
      • Probability of Claim
      • Liquidity Risk Factor (LRF)
      • Computing the Premium and Updating State
      • Visual Representation of Premium
    • Rebalancing
      • Cross-Side Rebalance and Swap Deadband
      • Asset and Capital Ledger
      • Rebalancing Trade Grid
      • Computing Swap Amounts
      • Same-Side Rebalancing
    • Taker Lifecycle
      • Taker Optionality
      • Taker Share
      • Taker Fungibility
      • Taker Position Token
      • Taker Risk Rates
      • Taker Renewal
      • Taker Close and Claim
      • Taker Position Expiry
      • Taker Ejection
      • Taker Cancellation
    • Maker Lifecycle
      • Maker Optionality
      • Maker Share
      • Maker Fungibility
      • Maker Position Token
      • Maker Risk Rates
      • Maker Withdrawal
      • Maker Renewal
      • Negative Yields
    • Simulation
    • Glossary
  • Governance
    • Overview
    • DAO Overview & Structure
      • Purpose of the DAO
      • Committees
      • Forum
      • Quorums
    • Economic Settings
      • Parameter tuning
      • Community involvement
    • Voting Power
      • vBUMP
      • Staking & Locking
    • Bumper Improvement Proposals (BIPs)
      • Before a proposal is created
      • Raising a proposal
      • Committee review
      • Warmup Period
      • Voting period
      • Grace & Queue periods
      • Abrogation
    • DAO user guides
      • How to Stake tokens in the Bumper DAO
      • How to Unstake tokens in the Bumper DAO
      • How to Claim Staking Rewards in the Bumper DAO
      • How to Lock tokens in the Bumper DAO
      • Delegating vBUMP
      • How to Undelegate vBUMP in the Bumper DAO
      • Voting on a governance proposal
      • Cancelling a vote
      • Voting on an Abrogation Proposal
      • Creating a Proposal in the DAO
      • Execute a proposal in the Bumper DAO
    • DAO Legal
  • Developers
    • Architecture
    • Modules
    • Contract Address List
  • Community
    • Community Code of Conduct
    • Alpha
      • Feedback and Support
      • Reporting Bugs
      • Connecting to Bumper network
  • Security
    • Audits
  • Legal
    • Terms and Conditions
    • Disclaimer
    • Privacy Policy
Powered by GitBook
On this page
  • Volatility
  • Liquidity
  • Emotion
  • Centralisation
  • Bumper: A Better Solution
  1. Learn
  2. Why Use Bumper?

Comparison with stop-loss

Stop-loss orders have long been a staple in traditional financial markets, offering traders a safety net against significant losses. However, when applied to the world of cryptocurrencies, this traditional risk management tool reveals several inherent flaws.

Volatility

The extreme volatility of the cryptocurrency market can trigger stop-loss orders during "flash crashes", selling off assets at low prices only to see them rebound shortly after. This can lead to premature selling, locking in losses instead of protecting gains.

Liquidity

In a fast-moving market, a stop-loss order might not execute at the desired price if there aren't enough buyers. This "slippage" can result in selling at a much lower price than intended, exacerbating losses instead of mitigating them.

Emotion

Setting the stop-loss level requires making a prediction about the market's future behaviour, which can be influenced by fear of loss or greed for gain. This emotional decision-making can lead to poor risk management decisions.

Centralisation

A significant drawback of using stop-losses for crypto risk management is the necessity of keeping your assets on a centralised exchange. This requirement contradicts one of the fundamental principles of cryptocurrencies: decentralisation. Centralised exchanges come with their own set of risks, including the risk of the exchange freezing their assets due to regulatory pressure or internal issues.

Bumper: A Better Solution

Given these challenges, it's clear that a more robust and reliable risk management solution is long overdue for the crypto market. Bumper, an innovative DeFi protocol, offers a risk market designed specifically for the unique characteristics of cryptocurrencies.

Bumper allows users to protect their tokens from price drops for a set period of time, safe in the knowledge that if the market bombs, the value of their crypto wallet won’t, and moreover, they still get to ride the rips to the moon should the market rebound back up.

PreviousWhy Use Bumper?NextComparison with options

Last updated 1 year ago