• Bumper, the DeFi platform, has released a simulation report which shows pricing efficiencies over traditional options desks.
• The report was powered by a $20 million investment and derived in collaboration with CADLabs and the Swiss Centre for Cryptoeconomics.
• Bumper’s dynamic pricing is based on forward volatility rather than implied volatility and marks a seismic shift in the digital asset landscape.
Bumper DeFi Protocol Set To Reshape Options Pricing
The DeFi platform Bumper has unveiled findings of their comprehensive simulations, exhibiting new pricing efficiencies over traditional options desks ahead of its protocol launch in August 2023. This is an important milestone in financial technology as it showcases an altogether new financial instrument that consistently outperforms existing options desks in generating both competitive premia and sustainable yields backed against multi-year historical cryptocurrency market data and options prices.
Research and Development Backing
The research behind this milestone was backed by a $20 million investment with two years of development headed by CADLabs and the Swiss Centre for Cryptoeconomics. The key highlights from the simulation report showed that on average, buyers paid 9.3% cheaper premia than buyers of traditional put options during the 2022 bear market without resorting to token incentives, while makers experienced a 46.2% improvement in yield compared to existing options pricing models. Additionally, Bumper’s results were found to have remarkable correlation with Nobel Prize-winning Black-Scholes model showing its resilience across different market conditions.
Dynamic Pricing Model
Bumper stands out due to its dynamic pricing model based on forward volatility rather than implied volatility which appeals to institutions and fund managers as well as retail crypto investors alike. Its findings challenge accepted norms of options pricing potentially reshaping not just the crypto space but also potentially penetrating traditional finance and disrupting the colossal $13 trillion derivatives market in future years.
Jonathan DeCarteret, CEO of Bumper commented on these remarkable results saying “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 $13 trillion derivatives market in the future”
The economic simulation report released today marks one of most substantial challenges to Black-Scholes derived pricing seen yet; positioning Bumpers as an immensely appealing prospect for institutionalised investing that could revolutionise how digital asset markets are priced moving forward