Introducing Airdrop Hedging with Vyper Protocol

Vyper Protocol
2 min readJun 5, 2023

Last week, a groundbreaking memecoin called Bonk Earn was launched on Solana, becoming the first coin to utilize the new token-2022 standard.

One of the most remarkable features of Bonk Earn ($BERN) was its airdrop strategy. A significant portion of the coin’s supply was airdropped for free, leading to a rapid rise in its trading volume, making it one of the most actively traded memecoins.

The airdrop was particularly exciting for $BONK holders as they received a substantial amount of tokens without any cost. However, the announcement of the airdrop before the launch caused a frenzy among buyers, driving up the price of $BONK. After the airdrop, many people quickly sold off their $BONK holdings. Those who mistimed their trades ended up suffering losses.

But what if there was a way to hedge the price of $BONK while still benefiting from the $BERN airdrop? Enter Vyper Protocol! Vyper enables the creation and trading of forward contracts, and it provides a solution to this predicament.

In this case, you could have bought $BONK at its current market price (spot) and simultaneously taken a short position on a $BONK forward contract with an expiry date set after the airdrop.

Vyper Derivatives Generator

Here’s how it works: If the price of $BONK had declined after the airdrop, you would have incurred losses on your spot position but gained from the forward contract, and vice versa. This strategy would have allowed you to mitigate the risk associated with the volatile price movements of $BONK.

It’s that simple! In fact, this is not the first instance of Vyper being utilized to hedge future token prices. For example, a user employed a forward contract to hedge $HADES emissions in a similar manner.

You can find a smart example of such usage by another user on Vyper Protocol’s here.

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Vyper Protocol

A DeFi primitive allowing users to create, trade, and settle any kind of on-chain derivatives 🐍 vyperprotocol.io