• Bumper, a DeFi platform, unveiled the findings of their comprehensive simulation, exhibiting new pricing efficiencies over traditional options desks.
• The report is the culmination of a two-year exercise in Research and Development backed with $20m investment.
• The report highlights the anticipated outcomes of Bumper’s dynamic pricing based on forward volatility rather than implied volatility.
Introduction
DeFi platform Bumper today unveiled the findings of their comprehensive simulation, exhibiting new pricing efficiencies over traditional options desks ahead of the protocol launch in August 2023.
Research and Development
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 Findings
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 and revealed remarkable correlation with Nobel Prize-winning Black-Scholes model across diverse market conditions.
Impact on Market
Bumper stands to revolutionise not just the crypto options market but also has potential to penetrate traditional finance and disrupt colossal $13T derivatives market in future. This report positions Bumper as an immensely appealing prospect for institutions and fund managers, in addition to retail crypto investors.
Conclusion
The findings of this economic simulation report marks significant validation for Bumper’s innovative approach to date which may challenge accepted norms of option pricing in half a century