> For the complete documentation index, see [llms.txt](https://docs.tapir.money/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.tapir.money/readme.md).

# What is Tapir?

**Tapir is a risk protection marketplace for high-yield DeFi.** It splits a yield-bearing asset into two tradeable positions: **DP (Depeg Protected)**, the risk-protected version of the asset, and **YB (Yield Boosted)**, which absorbs losses first in exchange for a higher potential return. You can also provide liquidity to the DP/YB market.

Both tokens remain backed by the underlying asset, so its yield-bearing economics remain in the pool. DP is the risk-protected claim on that collateral and YB the first-loss claim; the market sets the price of protection. Your net return depends on the price you pay, underlying performance, fees, and the eventual settlement.

{% hint style="info" %}
**Planned public opening: September 22, 2026, subject to launch readiness.** [Zircuit USDC Vault on Base](/live-markets/live-markets/zircuit-usdc-90d-base.md) is the designated launch pool. Point earning started separately, with Epoch 1 on September 25, 2026 at 00:00 UTC; see the pool's [per-epoch point schedule](https://docs.tapir.money/pages/LEA2cN6Bs0Zb3FKrATI9#id-7.-target-schedule-through-maturity). Read the [Zircuit Finance USDC Vault Risk Analysis](/security/vault-risk-reports/zircuit-finance-usdc.md) for the underlying vault’s risks.
{% endhint %}

***

## The problem: high DeFi yields carry loss risk

DeFi investments lose value from many causes, and depositors cannot rely on getting it back. Tapir’s [DeFi Investment Loss Analysis 2020–2026](/resources/defi-investment-loss-analysis.md) documents **$1.7 billion in gross losses across 25 events** since October 2020: exploits ($830M), depegs and redemption shortfalls ($723M), trading and liquidation losses ($97M), and credit losses ($53M). More than half came from exploits, strategy losses, and bad loans, many while the deposit token held its $1 value. The report is a selected catalogue, not a complete estimate of DeFi losses.

Tapir’s earlier [Long-Term Depegs in Crypto Assets, 2020–2025](https://hackmd.io/@WsWACVT3QOy5_gRc2Z3ZGg/BkEPcKvy-e) study looks at depegs alone. It estimates **$1.1–3.3 billion** in market-relevant losses from non-algorithmic depegs, treats algorithmic and governance-driven collapses separately at **$42–54 billion**, and provides its event-by-event sources and methodology.

This historical research explains the problem Tapir addresses. Protection is built from the yield-bearing asset itself: YB holders accept first-loss exposure in exchange for a market-priced premium, while the deposited asset remains productive. The mechanism reallocates available collateral; it does not create an external reserve or assure recovery of inaccessible assets.

***

## What DP protects against

DP protects against a loss in the underlying asset's value, whatever the cause: for example a strategy drawdown, a hack, an economic exploit, bad debt, or a stablecoin losing its peg. Tapir records such a loss as a **depeg**: a fall in the oracle-measured value below its high watermark. YB's share of the collateral then increases what DP redeems for.

Each market's oracle defines what is measured. A vault market reads the vault's redeemable share value, so a strategy loss or exploit that lowers it counts even if the stablecoin keeps its peg. Protection is defined by the mechanism, not by the type of event:

* **Only the loss recorded at maturity pays.** Protection pays on the loss in the oracle's final closing price, with any vault-value or PT-redemption adjustment, compared with its high watermark. If a dip recovers before maturity and the final closing price is back at its high watermark, DP redeems for nothing extra. The closing price uses the oracle's last checkpoints, which are not forced to stop exactly at maturity. Temporary discounts and withdrawal delays do not necessarily count either.
* **Structurally capped.** DP can offset an oracle-measured loss of up to 50% before fees. Beyond that, DP loses value too.
* **Paid in the underlying.** DP redeems in the pool's base asset. If that asset becomes frozen or inaccessible, Tapir cannot replace it.

See [Oracle Resolution](/protocol-mechanics/tapir-mechanics/oracle-resolution.md) for how each oracle measures value.

***

## Three ways to hold a position

| Side   | What you get                                                                                                    | Main trade-off                                                                                                             |
| ------ | --------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------- |
| **DP** | The risk-protected version of the asset: a larger share of the pool's collateral when the oracle records a loss | A market-priced premium; protection is limited by settlement rules, available collateral, and the structural 50% depeg cap |
| **YB** | Underlying yield exposure plus the economics of selling protection                                              | First-loss exposure; YB redemption value can fall to zero                                                                  |
| **LP** | Swap fees while liquidity is active in range                                                                    | Exposure to the DP/YB inventory, changing prices, liquidity conditions, and losses borne by YB                             |

Trading depends on available liquidity and the AMM's pause state. A position's market price before resolution can differ from its eventual redemption value.

### Why provide liquidity

Providing liquidity is a simple way to participate. Where a pool's incentive program is active, eligible LPs earn [holding points on their DP/YB principal plus fee-based points](/incentives.md) on the swap fees their position earns.

An LP position holds DP and YB, both backed by the same yield-bearing base asset. Its exposure to the base asset's yield therefore stays the same whichever token dominates (**delta neutral** to the DP/YB mix). What changes with the mix is depeg risk:

* **Equal DP and YB:** close to holding the base asset itself. DP's gain in a depeg offsets YB's loss.
* **Mostly YB:** closer to holding YB, with more first-loss exposure.
* **Mostly DP:** closer to holding DP, with more protection.

Trades shift this mix: when traders buy DP from the pool, the LP ends up holding more YB, and the reverse. An out-of-range position holds only one token. See [Liquidity risks](/system-workflow/liquidity.md#risks).

***

## How it works

Splitting **1 unit of the base asset** creates **0.5 DP + 0.5 YB**. DP and YB trade against each other on a Tapir-modified Uniswap V3 AMM. The quoted exchange rate reflects supply and demand for protection.

Each pool moves through **ACTIVE → COOLDOWN → RESOLUTION → REDEMPTIONS**. After the active period, the configured oracle submits reference and resolution prices. Once cooldown and price-age requirements are satisfied, anyone can call the pool's resolution function. Oracle data collection and submission require authorised operators; some oracle variants also support an admin-controlled manual backup.

If no depeg is recorded, each DP and YB redeems for one base-asset unit before fees. If a depeg is recorded, DP's rate increases up to two base-asset units per token and YB's rate decreases by the same amount. This can offset an oracle-measured price decline of up to 50% before fees; larger declines can leave DP holders with losses too.

The deeper material lives in [How It Works](/readme/how-it-works.md), [Tapir Mechanics](/protocol-mechanics/tapir-mechanics.md), and [Oracle Resolution](/protocol-mechanics/tapir-mechanics/oracle-resolution.md).

***

## What to check before using Tapir

* **The underlying and the market.** Review the asset, oracle configuration, maturity, liquidity, and controls for each market. Tapir adds contract and operational dependencies to those of the underlying position.
* **The audits and code.** Tapir Core V1 has reports from **Quantstamp and Hashlock**. See [Security and Audits](/security/security-and-audits.md) for scope, reports, and code verification. Audits do not eliminate risk.
* **The limits and timing.** Protection follows oracle inputs and the pool's formula. Settlement requires transactions and waiting periods; it is not an immediate payment when a price drops.

## Where to go next

* [How It Works](/readme/how-it-works.md) — the mechanism in three steps.
* [Live Markets](/live-markets/live-markets.md) — the Zircuit pool, its planned opening, and December 14 maturity.
* [Zircuit Finance USDC Vault Risk Analysis](/security/vault-risk-reports/zircuit-finance-usdc.md) — the full September 7 research report.
* [Using Tapir](/system-workflow/using-tapir.md) — strategies for buyers, yield-seekers, and LPs.
* [Markets](/system-workflow/markets.md) — reading the dashboard and navigating a market.
* [Incentives overview and points rules](/incentives.md) — how holding and liquidity rewards work, with visual examples.
* [DeFi Investment Loss Analysis 2020–2026](/resources/defi-investment-loss-analysis.md) — the losses DeFi investors have carried, by cause.
* [FAQ](/resources/tapir-faq.md) — costs, protection limits, maturity, and access.
* [Tapir Core V1 source and technical documentation](https://github.com/tapir-protocol/public-tapir-core-v1) — contracts, lifecycle, access controls, and audit verification.