A Buffer Contract is a type of financial agreement designed to manage risk in trading or holding cryptocurrencies. It acts as a safeguard against price volatility. When market conditions fluctuate, a Buffer Contract allows traders to mitigate potential losses by setting predetermined price levels.Typically, this contract involves depositing a certain amount of cryptocurrency as collateral. If the market price of the asset falls below a specific threshold, the contract triggers pre-defined actions. These actions can include automatic selling or buying of the asset, which helps to limit losses or lock in profits.Buffer Contracts may also serve to protect investors during highly volatile market events. By using such contracts, traders can effectively manage their exposure and maintain a strategic approach to their investments. Ultimately, this tool enhances decision-making and adds a layer of security, allowing participants to navigate the unpredictable landscape of cryptocurrency trading more confidently.