> 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/protocol-mechanics/tapir-mechanics.md).

# Tapir Mechanics

Tapir is a risk protection marketplace tailor made for decentralized finance. In practice, it lets you hedge against — or express a view on — depeg events for pegged crypto assets such as stablecoins, liquid staking tokens, and other yield-bearing assets.

The protocol works by splitting a base asset into two derivative tokens with **asymmetric payoffs** tied to whether the final oracle measurements show a qualifying depeg. If you believe a depeg will happen, you hold one side. If you believe the peg holds, you hold the other — and earn yield for taking that risk.

***

### Core concepts

| Concept        | Description                                                                                                    |
| -------------- | -------------------------------------------------------------------------------------------------------------- |
| **Base Asset** | The underlying pegged asset being protected (for example, a stablecoin or yield-bearing token).                |
| **DP Token**   | Depeg Protection — its base-token redemption amount rises on a detected depeg (up to 2x).                      |
| **YB Token**   | Yield Boosted — earns higher yield but loses value if a depeg occurs.                                          |
| **Pool**       | A market with a fixed active period and a settlement lifecycle.                                                |
| **Oracle**     | An on-chain, multi-source oracle system that records prices over time and determines whether a depeg occurred. |

***

### How it works

Tapir's mechanism has three core pillars:

#### 1. Depeg risk splitting

Every Tapir pool lets you **split** a base asset into two derivative tokens – DP and YB – at a fixed 1 : 0.5 : 0.5 ratio. These two tokens represent opposite sides of the same bet:

* **DP** appreciates if a depeg occurs (protection buyer).
* **YB** earns yield when the peg holds (yield seeker).

At pool resolution, the pool compares the prices supplied by its configured oracle to determine whether the asset depegged. Token redemption values adjust accordingly, but the total value is always conserved: `dpValue + ybValue = 200%`.

Read the full breakdown in [Depeg Risk Splitting](/protocol-mechanics/tapir-mechanics/depeg-risks-splitting.md).

#### 2. Pool lifecycle

Each pool progresses through four stages:

```
Active  ──▶  Cooldown  ──▶  Resolution  ──▶  Redemptions
```

| Stage           | What happens                                                                        |
| --------------- | ----------------------------------------------------------------------------------- |
| **Active**      | Users split, unsplit, trade DP and YB, and provide liquidity.                       |
| **Cooldown**    | Splitting and unsplitting stop. The configured oracle submits final prices.         |
| **Resolution**  | Anyone can calculate the outcome once cooldown and minimum price age are satisfied. |
| **Redemptions** | Users redeem at the fixed rates, subject to fees and the pool being unpaused.       |

#### 3. AMM (Automated Market Maker)

Tapir uses a Uniswap V3-style concentrated liquidity AMM to facilitate trading between DP and YB tokens. If markets expect no depeg, the protection premium may shrink as maturity approaches (**theta decay**). Prices remain market-driven; the contracts do not force convergence to 1:1 or automatically stop external AMM trading at maturity.

Read more in [AMM](/protocol-mechanics/tapir-mechanics/amm.md) and [Oracle Resolution](/protocol-mechanics/tapir-mechanics/oracle-resolution.md).

***

### Deployment model

Each pool has its own network, base asset, oracle, and maturity. Find available offerings in [Live Markets](/live-markets/live-markets.md), follow [Getting Started](/system-workflow.md) for access and preparation, and use [Source Code & Contracts](/resources/source-code-and-contracts.md) for deployment references.

***

### Supported asset categories

* **Stablecoins**
* **Yield-bearing assets**
* **Liquid staking and restaking assets**
* **Other pegged assets where depeg risk matters**

The protocol is extensible — new asset categories can be added as the ecosystem grows.