What is Tapio Finance? Tapio Finance is a DeFi protocol that solves the liquidity problem for the ETH and LST (Liquid Staking Token) asset pair. The project is invested and supported by large funds such as Polychain Capital, Arrington XRP Capital, Hypersphere Ventures, The Spartan Group,…
So what is Tapio Finance? How is it different from other projects? Let’s find out in this article!
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What is Tapio Finance?
Overview of Tapio Finance
Tapio Finance is a DeFi protocol focused on solving the liquidity problem for the ETH asset pair and LSTs. It creates deep liquidity and helps between Peg for LST assets and asset holders especially LST to earn more profits. Put the LP Token pair of the above asset pair back into DeFi as tapETH Token.
Tapio Finance is a Synthetic Asset protocol, allowing minting LP or LP pairs of ETH with LST (stETH, rETH,…) into tapETH. And tapETH can be used for reuse in DeFi such as providing liquidity, collateral for loans,…
Tapio Finance can be called a Dex for LST and ETH assets because the protocol allows swapping between LST and ETH assets. This swap is built on Curve Finance’s model and leverages liquidity from tapETH minting.
tapETH is the LP token minted by deposit LST and native ETH into individual liquidity pools (such as stETH-ETH, rETH-ETH,…). tapETH is pegged to the original ETH, meaning it is on par with ETH. So holders can still directly swap tapETH to ETH or LST.
Tapio helps LST and ETH asset holders earn a lot of real profits (Real Yield) such as: rewards from LST, protocol transaction fees (Tapio), hold tapETH or use it to continue Farming or for other purposes.
Mechanism of action
Mint tapETH
Users can add asset pairs at any rate such as stETH-ETH, rETH-ETH, cbETH-ETH,… or add liquidity with just a single asset to mint tapETH at the same rate. tapETH is pegged to ETH, so if you deposit 2 stETH and 5 ETH, you will mint 7 tapETH.
Although minted from LP Token, tapETH operates like a regular asset in the DeFi market. Can be swapped with ETH or LST assets, used as collateral to borrow assets, farm liquidity on Dex,…
Stableswap
Stableswap is a Dex product built by Tapio itself but the model is based on Curve Finance. This Dex takes advantage of liquidity from minting tapETH. Or to put it another way, users who add liquidity to the Dex instead of receiving pairs of LP tokens like other Dexes, they receive reusable tapETH.
Tapio Finance builds Dex with liquidity pools consisting of only 1 single and independent Token pair. The Pool only contains 1 pair of Tokens, meaning 2 assets, which will help balance the price better than Pools containing many assets. And another highlight with this model is minimizing the risk that when an asset is lost pegged to ETH, that Pool will not affect other Pools.
Tapio Fiannce’s stablewap is mainly used to provide liquidity, keep prices for LST assets, and increase income for tapETH holders. In addition, this product can also be integrated on Dex Aggregators such as 1Inch.
Price retention mechanism
The nature of tapETH is ETH’s LP Token or ETH’s Liquid Staking Token product, so it can always be converted 1:1 with ETH. Therefore the risk for this model is quite low. But they are paired to trade on Dexes, so the risk of price discrepancies cannot be avoided.
If a stETH/ETH Liquidity Pool is overdrawn with ETH, the protocol will encourage the process of exchanging ETH to receive assets for a larger amount of stETH or using that amount of stETH to mint tapETH and bring tapETH to secured Dexes. Swap liquidity to ETH.
Tapio Finance’s operating model
Tapio Finance’s model is to encourage users to provide liquidity to Stableswap by minting tapETH and continuing to use tapETH to further participate in the DeFi market. Thanks to the swap of LST and ETH assets, the project earns fees to reward tapETH holders.
Rewards for holding tapETH
- Staking rewards: Rewards are generated by underlying LSTs in the tapETH pool, which are collected by Tapio and converted into tapETH for users to then claim in the app.
- Swap fee: NThe tapETH group allows low slippage swaps between not only LST and ETH but also between LSTs.
- Instant withdrawal fee: HPartnering with LSTs to provide instant withdrawal functionality, supported by tapETH pools by corresponding swaps, which of course earns a fee.
- Redemption fee: While tapETH does not charge minting or sending ETH/LST fees, there is nevertheless a redemption fee, i.e. converting your tapETH back into ETH or any combination of LST. This fee (like the Swap Fee) will be subject to adjustment by the community once our governance module is live.
- The fees are decentc: tapETH may also collect some fees in the future, for example creating an arbitrage focused feature in the dApp that could collect % to facilitate transactions. Revenue sharing from directing TVL to other protocols can also be another source of income, after activating Tapio bribe protocols with veTAPIO,…
The difference of Tapio Finance
- Allows minting LP Tokens of ETH and LST asset pairs into tapETH for reuse in DeFi. Open liquidity and create applicability for LPs of parity asset pairs.
- Increase profits for ETH and LST asset holders.
- Integrating many products so users can Farm directly right on Tapio.
Development Roadmap
- Launch testnet.
- Mainnet launch: rETH, stETH and nVarious DeFi integrations.
- tapETH is used as collateral.
- Extend to Layer 2
- Integration of additional LSTs: sfrxETH, swETH, cbETH, lsETH,…
- Tapio’s Pools are multi-chain enabled.
- Expand to EVM chains.
- Expand to other chains (like Solana,…)
Core Team
Sushant Kurren: Project Lead
- In 2021, Sushant graduated with a bachelor’s degree from Macquarie University with a major in Economics.
- In 2022, Sushant worked as User Operations at Acala, where he was responsible for community management, guidance and education, and encouraging users to participate in testing.
- Currently, Sushant is Growth Lead NUTS Finance (Marketing, Business Development, Integration, Product Design) and Project Lead at Tapio Finance.
Investors
October 17, 2022: Seed round successfully raised $4M led by Polychain Capital, Arrington XRP Capital, Hypersphere Ventures and participation from The Spartan Group, CMS Holdings, Genblock Capital, Double Peak, LongHash Ventures, D1 Ventures, 0xVentures, Valhalla Capital, PAKA.
Tokenomics
Overview information about Token Tapio Finance
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Token Allocation
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Token Release
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Token Use Case
Tapio uses the veToken model for its TAP governance token. VeTAP holders can participate in protocol governance, Voting TAP reward distribution, share protocol revenue, and receive bribe rewards.
Exchanges
Update…
Tapio Finance’s Information Channel
- Website: https://tapio.finance/home
- Twitter: https://twitter.com/TapioFinance
- Discord: https://discord.gg/sDpevfRXHa
- Blog:
Summary
Tapio Finance is a project at the forefront of bringing LP assets to reuse in the DeFi market, helping to unlock abundant liquidity in the LSD market. It also helps increase profits for LST holders and helps stabilize LST prices, increasing liquidity for ETH/LST pairs.
So I have clarified what Tapio Finance is? Advantages and disadvantages of the protocol. Hope this article brings a lot of useful information and knowledge!