Tapir FAQ

Frequently Asked Questions about Tapir

What is Tapir Protocol and what problem does it solve in DeFi?

Tapir Protocol is a decentralized depeg protection marketplace designed to improve risk management in DeFi. It addresses the inefficiencies of traditional insurance models that require locking up capital in unproductive reserves. Tapir allows users to buy or sell protection against asset depegs while keeping their assets actively generating yield, optimizing strategies without sacrificing returns.

How does Tapir's depeg protection marketplace work?

Tapir uses a token splitting mechanism. Users split their assets into two components: DP (Depeg Protected Asset) and YB (Yield Boosted Asset). The DP token acts as insurance, compensating holders if the asset's value falls below a predefined threshold. The YB token amplifies returns by assuming depeg risk and is sold to yield-seeking investors. These DP and YB tokens are then traded on an integrated AMM, allowing for real-time pricing of risk and yield.

What are the key benefits of using Tapir Protocol for protection buyers (DP holders)?

DP holders benefit from hedging depeg risks without sacrificing yield potential. They also gain flexible coverage, being able to choose protection periods (e.g., 30, 90 days) and customize their exposure by trading DP/YB tokens.

What are the key benefits for protection sellers (YB holders)?

YB holders can earn premiums by underwriting depeg risk through the sale of YB tokens. A significant benefit is capital productivity, as YB tokens derive value from the underlying asset (e.g., sUSDe), avoiding the need for idle collateral.

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

Tapir creates a liquid market for pricing and transferring risk, addressing a significant gap in the DeFi landscape. It also avoids the inefficiency of traditional insurance models by ensuring that capital remains productive instead of being locked in reserves. This allows DeFi to evolve beyond inefficient models where insurance requires locking stablecoins or ETH.

What makes Tapir stand out from other risk management solutions in DeFi?

Tapir's key differentiators are its decentralized risk pricing, time-bound pools, and transparent resolution mechanism. The AMM-driven market allows supply and demand to dynamically set the cost of depeg protection, reflecting real-time risk sentiment. Protection pools expire after fixed durations, enabling structured risk management. Automated depeg checks at pool expiry use on-chain price oracles to determine payouts, ensuring fairness and transparency.

What are DP and YB tokens?

DP (Depeg Protected Asset) tokens act as insurance. If the underlying asset's value drops below a predefined threshold, DP holders are compensated. YB (Yield Boosted Asset) tokens are sold to yield-seeking investors and amplify returns by assuming depeg risk.

What is the role of the AMM in the Tapir Protocol?

The integrated AMM (Automated Market Maker) plays a vital role in enabling dynamic trading of DP and YB tokens. This allows for real-time pricing of risk and yield based on supply and demand, ensuring a decentralized and efficient marketplace for depeg protection.