By becoming the efficient liquidity standard for uniform assets on Polkadot, Tapio can bring benefits for: Holders, Liquidity Providers, Traders and Application Builders.
Tapio synthetic assets can increase the usability of uniform assets (ie. DOT, LDOT, LCDOT) by unlocking liquidity from crowdloan and staking use cases. Example: tDOT is a synthetic asset that can be synthesized from DOT-LDOT and DOT-LCDOT. tDOT holders can use it as collateral to mint aUSD while keeping the underlying rewards generated from the liquid crowdloan application.
Further to earning trading fees passively, Liquidity Providers receive a better pegged and usable synthetic asset in return for providing liquidity. Example, DOT uniform asset holders (ie. LDOT, LCOT) can provide liquidity to the Stable Swap pool and receive tDOT. Liquidity Providers can use tDOT as collateral to mint stablecoins or borrow other assets. The trading fees generated from the Stable Swap pools are collected externally so that LPs can put their synthetic assets to use without compromising trading fees.
Traders can swap uniform assets at high efficiency and low slippage via the Tapio protocol. When any underlying asset loses its peg, Traders can easily discover and capture arbitrage opportunities, which also helps maintain the value of the synthetic asset. Example: LCDOT is trading at an unusually large discount relative to DOT. Traders are motivated to arbitrage this opportunity, bringing the discount between LCDOT and DOT back to a normal range. During this process, the value of tDOT remains stable.
Application Builders can bootstrap liquidity by renting from the common synthetic pool (ie. tDOT). Example: A new project team is bootstrapping an ABC-DOT LP pool on Acala DEX. The project team can contribute single-side liquidity (ie. ABC token) to Tapio protocol in order to earn TAP tokens. The project team can stake TAP for voting rights to direct liquidity from the common synthetic pool to pair with the single-side liquidity to form ABC-tDOT LP pool. This is a cost effective way for any Project Teams with limited capital to bootstrap an LP pool with deep liquidity on a DEX.