Bumper’s DeFi protocol can reshape Options pricing
London, United Kingdom, May 31, 2023, Chainwire
Bumper, a decentralized finance (DeFi) platform, has unveiled the findings of their simulation, revealing new pricing efficiencies over traditional options desks ahead of the protocol launch in August 2023.
This report delineates a milestone in financial technology, showcasing a new financial instrument that consistently outperforms existing options desks in generating both competitive premia and sustainable yields, backtested against actual, multi-year historical cryptocurrency market data and options prices.
The report is the culmination of a two-year exercise in Research and Development powered by a $20m investment and derived in collaboration with CADLabs and the Swiss Centre for Cryptoeconomics.
Key highlights from the simulation report:
- On average, Bumper Takers paid 9.3% cheaper premia than buyers of traditional put options.
- During the 2022 bear market, Bumper’s simulation showed a yield improvement of 46.2% for Makers compared to options pricing without resorting to token incentives.
- The protocol remained solvent throughout the simulated conditions.
- Despite having different inputs and methodology, Bumper’s results reveal a remarkable correlation with the Nobel Prize-winning Black-Scholes model.
The results have improved the Bumper protocol’s resilience in different market conditions.
On the release of the report, Bumper CEO Jonathan DeCarteret said:
“By challenging and potentially reshaping the accepted norms of options pricing, Bumper stands to revolutionize not just the crypto options market, but also has the potential to penetrate traditional finance and disrupt the colossal $13T derivatives market in the future.”
The report underscores the anticipated outcomes of Bumper’s dynamic pricing based on forward volatility rather than implied volatility.
Based on the findings of the simulation report, Bumper could be an investment opportunity for individual retail crypto investors and institutional fund managers.
The economic simulation report released today marks the most significant validation of Bumper’s innovative approach to date and signals what could be one of the most substantial challenges to the Black-Scholes derived pricing in half a century.
Read Bumper’s simulation report here, and for more information on the protocol, visit https://bumper.fi.
About Bumper
Bumper is a DeFi risk market that protects from downside volatility in the price of crypto assets.
Users buying protection (Takers) set a price at which they wish to protect their crypto should the price fall, but they don’t lose out if the market heads upwards.
Conversely, other users (Makers) earn a yield by providing stablecoin liquidity to the protocol.
Learn more about Bumper
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Contact
CMO
Jason Suttie
Bumper
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