Tapir FAQ

Frequently Asked Questions about Tapir

General FAQ

What is Tapir Protocol?

Tapir Protocol is a decentralized depeg protection marketplace that transforms how DeFi users manage risk. Instead of choosing between yield and safety, Tapir lets you do both:

1. protect your assets against depeg events while

2. keeping 100% of your capital productive and earning yield.

Whether you want to hedge your exposure or boost your returns by taking on additional risk, Tapir creates a fair, transparent market where both strategies can thrive.

Note: Using Tapir requires understanding DeFi fundamentals. We encourage all users to do their own research (DYOR) before participating, particularly if selling protection (buying more YB position).

What Problem does Tapir solve?

DeFi has lost over $1.2 billion to depeg events since 2021, across 1,300+ incidents affecting major assets like stablecoins, liquid staking tokens, and yield-bearing positions. Yet $150B+ (0.2%) in yield-bearing DeFi assets remain structurally unhedged.

Traditional protection solutions force users into an impossible choice:

• Lock capital in idle reserves (losing yield)

• Pay expensive premiums from external capital

• Accept coverage gaps and slow claim processes

Tapir eliminates this tradeoff. Both protection buyers and sellers keep their full base yield while managing risk, something no other solution offers for high-yield assets.

What makes Tapir Different from other DeFi Risk solutions?

Feature	Tapir	Traditional Alternatives
Capital Efficiency	100% productive – no idle reserves	Requires locked, non-yielding collateral
Yield Preservation	Full base yield for both parties	Protection costs reduce returns
Depeg Coverage	✅ Explicitly included	Often excluded or restricted
Resolution	Automatic, oracle-based settlement	Manual claims, slow processing
Pricing	Real-time market-driven via AMM	Fixed premiums, less responsive

Key differentiators:

1. Unprecedented capital efficiency – Your assets keep earning while protected

2. Decentralized risk pricing – Supply and demand set protection costs in real-time

3. Transparent resolution – On-chain oracles trigger automatic payouts at maturity

4. Flexible positions – Trade DP and YB tokens anytime to adjust your exposure

How does Tapir contribute to the DeFi ecosystem as a whole?

Tapir creates a liquid market for pricing and trading risk, addressing a significant gap in the DeFi landscape. It also avoids the inefficiency of traditional depeg protection protocols by ensuring that 100% of the capital remains productive instead of being locked in reserves. This allows DeFi to attract investors from traditional finance who now have the opportunity to derisk their DeFi exposure.

What makes Tapir stand out from Other Risk Management Solutions?

Tapir's key differentiators are:

1. Decentralized risk pricing – AMM-driven market sets protection costs based on real-time supply and demand

2. Capital efficiency – 100% of capital remains productive for both protection buyers and sellers

3. Flexibility – Trade DP and YB tokens anytime to adjust exposure

4. Transparent resolution – Multi-source oracles with manipulation-resistant pricing trigger automatic payouts at pool expiry

Protection pools expire after fixed durations, enabling structured risk management with predictable settlement dates.

Why choose Tapir over DeFi insurance protocols?

Traditional DeFi coverage protocols typically:

• Exclude depeg events from coverage

• Require capital to sit idle in reserve pools

• Involve lengthy manual claims processes

• Charge premiums that eat into your yield

Tapir takes a fundamentally different approach:

Aspect	Traditional Coverage	Tapir
Depeg events	Often excluded	✅ Core focus
Your capital	Idle in pools	Fully productive
Claims	Manual review	Automatic settlement
Yield impact	Premiums reduce returns	Full yield preserved

Note: Tapir is a DeFi risk solution protocol, not insurance. We use terms like "coverage mechanisms" and "protection" rather than "insurance" to accurately describe our decentralized, market-based approach.

Core Concepts

What is a Depeg event?

A depeg occurs when an asset's value drops below its expected peg or reference price. This can happen due to:

• Smart contract exploits – Hacks draining protocol funds

• Slashing events – Validators penalized in staking protocols

• Market stress – Large redemptions in thin liquidity

• Protocol failures – Underlying yield strategies experiencing losses

Example: In July 2025, sUSD on Optimism dropped ~5% (to $0.95-0.96) after a $4.5M unwind in thin market conditions. This "soft depeg" is exactly the type of event Tapir protects against.

What are DP and YB tokens?

When you deposit assets into Tapir, they're splittable into two tradeable components:

DP (Depeg Protected) Token

• Represents your protected position

• If a depeg occurs, DP holders are made whole first

• Sacrifices a small portion of yield for safety

• Ideal for risk-averse investors seeking stable returns

YB (Yield Boosted) Token

• Represents the risk-taking position

• Earns additional yield by absorbing depeg risk

• In a depeg event, YB holders bear amplified losses

• Ideal for sophisticated investors comfortable with higher risk/reward

Think of it like this: DP and YB tokens are two sides of the same position. Protection buyers (DP) pay a small yield premium to protection sellers (YB) in exchange for downside coverage.

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How Does the Token Splitting Mechanism Works?

Step-by-step example:

1. Alice deposits 1 token_A into Tapir

2. Tapir splits it into 0.5 DP_token_A + 0.5 YB_token_A

3. Alice wants full protection, so she sells her 0.5 YB tokens

4. At current market rate (e.g., 1.02 YB/DP), she receives ~0.49 DP tokens

5. Alice now holds ~0.99 DP_token_A — nearly full protection

Meanwhile, Bob wants maximum yield:

1. Bob also deposits 1 token_A → receives 0.5 DP + 0.5 YB

2. Bob sells his DP tokens for more YB tokens

3. Bob now holds ~1.01 YB_token_A — boosted yield, amplified risk

At maturity:

• If no depeg: Both redeem full value. Alice earns ~6% (slightly reduced), Bob earns ~8% (boosted)

• If 5% depeg: Alice redeems 1:1 (protected). Bob's YB tokens absorb losses, redeeming at ~0.90

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What is the Role of the AMM in Tapir?

The integrated Automated Market Maker (AMM) enables:

• Real-time risk pricing – DP/YB exchange rates reflect market sentiment on depeg probability

• Instant liquidity – Trade between DP and YB positions anytime

• Decentralized price discovery – No centralized oracle determines protection costs

• Flexible position management – Adjust your risk exposure as conditions change

The AMM creates a continuous market for depeg risk, allowing supply and demand to dynamically set protection costs.

What is the Risk Trilemma?

The Risk Trilemma describes three properties that traditional protection solutions struggle to achieve simultaneously:

Property	Definition	Tapir's Approach
Full Collateralization	Principal fully backed, no underwriter insolvency risk	✅ All positions backed by real assets
Full Coverage	Protection pays out completely when triggered	✅ Up to 50% loss coverage*
Yield Preservation	Protected capital continues earning	✅ 100% capital remains productive

Tapir uniquely solves all three.

Transparency Note: Coverage is capped at 50% loss per the protocol's risk parameters. Depeg events exceeding 50% may result in partial protection. Always understand your coverage limits before depositing.

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For Protection Buyers (DP Token Holders)

What are the benefits of holding DP tokens?

1. Hedge depeg risk without sacrificing yield Your protected position continues earning the underlying protocol's base yield—you're not parking capital in an idle reserve.

2. Flexible coverage Buy and sell DP tokens anytime through the AMM. Customize your protection level based on market conditions.

3. Automatic settlement No claims to file. If a depeg occurs, the protocol automatically calculates and distributes payouts at maturity using on-chain oracles.

4. Transparent pricing See exactly what protection costs in real-time. Market-driven pricing means you're paying fair value based on actual risk assessment.

What happens to my DP tokens during a depeg event?

Scenario: Asset depegs by 5%

Your Position	No Depeg	5% Depeg
Hold 1 DP token	Redeem for 1 token + yield	Redeem for 1 token + yield (protected)
Effective return	Full base yield	Full base yield, no loss

DP tokens redeem 1:1 at maturity regardless of depeg severity (up to the 50% coverage limit). The YB tokens in the pool absorb losses to make DP holders whole.

Key benefit: You lock in your protection at the time of purchase. The only requirement is that the depeg event stays within the 50% coverage limit.

What is the coverage limit?

Tapir provides up to 50% loss coverage per pool. This means:

• Depeg of 10% → DP holders fully protected

• Depeg of 30% → DP holders fully protected

• Depeg of 50% → DP holders fully protected

• Depeg exceeding 50% → Partial protection (losses beyond 50% may affect DP holders)

Important: The 50% coverage limit is a structural feature of the DP/YB split mechanism. Always consider this when assessing whether Tapir's protection meets your risk management needs.

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For Yield Seekers (YB Token Holders)

What are the benefits of holding YB tokens?

1. Boosted yield Earn additional returns on top of the base yield by taking on depeg risk. In normal market conditions, this premium can significantly enhance your returns.

2. Perfect capital efficiency Unlike traditional underwriting that requires idle collateral, your YB tokens derive value from the underlying productive asset. No dead capital.

3. Market-driven premiums The AMM ensures you're compensated fairly for the risk you take. Higher perceived depeg risk = higher YB yields.

4. Full liquidity Trade YB tokens anytime to exit your position or adjust exposure based on changing risk assessment.

What are the risks of holding YB tokens?

YB tokens carry amplified downside exposure:

Depeg Severity	YB Token Redemption
No depeg	100% + boosted yield
5% depeg	~90% + boosted yield
25% depeg	~50% + boosted yield
50% depeg	~0% (total loss)

Key risks to understand:

1. Leveraged losses — YB tokens absorb 2x the depeg (to cover DP holders)

2. Market timing — YB prices fluctuate based on perceived risk

3. Protocol risk — Smart contract vulnerabilities could affect all positions

For sophisticated users only: Selling depeg protection through YB tokens requires thorough due diligence on the underlying asset's risk profile. Only participate with capital you can afford to lose.

Who should consider YB tokens?

YB tokens are designed for:

• Risk-tolerant investors comfortable with leveraged exposure

• Analysts with conviction on specific assets' stability

• Yield optimizers seeking maximum returns in normal conditions

• Sophisticated DeFi users who understand the mechanics

Not recommended for:

• New DeFi users still learning fundamentals

• Risk-averse investors seeking capital preservation

• Anyone unfamiliar with the underlying assets

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Using the Protocol

What do I need to start using Tapir?

Requirements:

1. Self-custodial wallet – MetaMask, WalletConnect-compatible, or similar

2. Supported assets – Tokens from integrated protocols (currently Pendle ecosystem)

3. Gas fees – Small amount of ETH for transaction costs

Getting started: Connect your wallet at tapir.money, select an available pool, and choose whether to hold DP tokens (protection) or YB tokens (yield boost).

What assets can I protect on Tapir?

Current & Planned Integrations:

Planned integration is subjective to the nature and demand of Tapir Protocol, not guaranteed, but actively working on it.

Phase	Assets/Protocols	Status
Phase 1	Etherfi (weETH)	Current focus
Phase 1	Zircuit ecosystem	$1M committed liquidity
Phase 2	Pendle, Ethena (USDe), Moneta (USDM)	Planned
Phase 2	stETH (Lido), (Kelp DAO) rsETH, Eigenlayer assets	Planned

Why Etherfi weETH first? We are proving that the depeg protection marketplace has real value by starting with a well-established asset. Our goal is to bring depeg protection to many more high-yield-bearing assets, where the highest-yield positions are often the newest and riskiest—exactly where depeg protection adds the most value.

Security & Risk

Has Tapir been Audited?

Yes, we are audited by Quantstamp.

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What are the Risks of Using Tapir?

Protocol-Level Risks:

Risk Type	Mitigation
Smart contract risk	Audit (completed)
Oracle risk	Multiple oracle sources, manipulation resistance
Liquidity risk	AMM design, liquidity incentives

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Position-Specific Risks:

Position	Key Risks
DP holders	Coverage limited to 50%; extreme events may exceed coverage
YB holders	Amplified losses (2x depeg exposure); total loss possible at 50%+ depeg

General DeFi risks apply: Smart contract vulnerabilities, oracle manipulation, governance attacks, and market volatility can affect any DeFi protocol. Never invest more than you can afford to lose.

How does Tapir handle Depeg Detection and Settlement?

Tapir uses a multi-source oracle system with manipulation-resistant price sampling to ensure fair, automatic settlement.

Oracle Architecture:

• Multiple price sources – Each oracle instance consumes 2-4 sources (e.g., Chainlink, Pyth, and more, on-chain AMM TWAPs)

• Median pricing – The protocol takes the median of available sources to filter outliers

• Immutable sources – Once initialized, oracle sources cannot be added or removed, preventing attack vectors

Price Recording:

Prices are recorded at least once every 24 hours, with increased frequency (e.g., every 30 minutes) during the final days before pool maturity. Sampling occurs during peak trading hours (14:30-17:30 UTC) with randomized timing to prevent manipulation.

Two Key Price Calculations:

Price Type	Purpose	Calculation
High Watermark Price	Captures the highest robustly-held price	Maximum of minimum values across consecutive 3-day price triplets
Closing Price	Reference price for settlement	Median of the 5 most recent daily prices before maturity

Settlement Process:

1. Oracle records prices throughout the pool duration using the primary price array

2. Secondary price array derives one price per day (median of daily recordings)

3. At maturity, High Watermark and Closing Price are calculated

4. Depeg determination: If Closing Price < High Watermark Price, a depeg has occurred

5. Automatic payout: DP holders redeem first (up to 1:1), YB holders receive remaining value

No manual claims. No governance votes on payouts. Transparent, rules-based settlement.

Why this design? The triplet-based High Watermark and 5-day median Closing Price are specifically designed to resist short-term price manipulation and flash crashes, ensuring fair outcomes for all participants.

How can I Participate in Tapir Governance?

TPR token holders can participate in governance through the DAO structure:

Governance Powers:

• Direct DAO decisions and priorities

• Vote on budget allocation from treasury

• Approve or reject team funding proposals

• Influence protocol parameter changes

How it works:

All funds raised from token sales are deposited into the treasury. The core team submits proposals to the DAO to receive payments, ensuring transparent and community-approved spending.

Token Generation Event (TGE) is planned for 2026 H2, alongside the launch of the TPR points program for liquidity providers and early adopters.

What is Needed to Trade on Tapir?

• A self-custodial wallet (MetaMask, WalletConnect-compatible, etc.)

• Supported assets from integrated protocols

• A small amount of ETH for gas fees

Still Have Questions?

Join our community channels for support:

• Telegram: [Link to be added]

• Twitter/X: https://x.com/tapir_protocol

• Website: https://www.tapir.money/

• Documentation: https://tinyurl.com/tapir-data-room

This FAQ is updated regularly.

Last updated: 6 Feb 2026