Buffer System

To enhance protocol resilience, Tapio employs a sophisticated buffer system that sets aside a configurable percentage of collected fees as a protective reserve for unexpected market conditions.

Key Features:

• Automatic Allocation: A portion of all collected fees (converted to SPA tokens) is allocated to the buffer before distribution to SPA holders

• Loss Absorption: When adverse market conditions occur, the buffer automatically absorbs losses before affecting SPA holder balances

• Negative Rebase Protection: If losses exceed buffer capacity, the system can perform controlled negative rebases rather than sudden devaluations

• Configurable Protection: Buffer percentage can be adjusted through governance to optimize yield versus protection

• Parameter Adjustment Protection: During governance parameter changes like amplification coefficient adjustments, the buffer automatically handles value fluctuations, absorbing excess value when parameters increase pool value, or covering deficits when they decrease it

The buffer system ensures long-term protocol sustainability and protects SPA holder value during market stress, providing an additional layer of security beyond traditional AMM mechanisms.