Tapio’s synthetic assets can increase the usability of uniform assets (e.g. DOT, LDOT, lcDOT) by unlocking liquidity from crowdloan and staking use cases.

For example, a user can hold tDOT and then borrow or mint aUSD against opening up the ability to pursue other yield generating ventures. The tDOT within your vault however is still accumulating yield from the underlying assets.

An institutional holder of DOT who wants to generate yield on their holdings has a hard time if also wanting to simultaneously maintain liquidity. Staking on the relay chain has a lengthy 28 day unbonding period, and if using a liquid staking solution, there is still a level of volatility that has to be taken into account. With tDOT being pegged to native DOT, users are able redeem 1:1 at anytime - regardless of market conditions.

While LPs are able to earn trading fees passively, with tDOT, they’re able to also receive a pegged asset without impermanent loss (due to dynamic nature of the composition), which is also far more usable. For example, if DOT derivative holders can provide liquidity and receive tDOT in exchange which can then be used to mint stablecoins or use as collateral to borrow other assets.

Users are able to swap uniform assets with high efficiency and low slippage using Tapio protocol such as when swapping DOT to LDOT and vice versa. Also, when underlying assets temporarily lose their peg, traders are able to take advantage by exploiting arbitrage opportunities.

For example, in a volatile environment, users may be selling their LDOT for DOT, inducing a discount on LDOT, which can then be taken advantage of by depositing DOT and receiving more than 1 DOT worth of LDOT in return - while tDOT maintains it’s peg throughout.

Developers building applications are faced with countless versions of assets on multiple parachains from liquid staked tokens, to crowdloan derivatives. Rather than integrating each of these assets individually, tDOT can instead be adopted which enables the acquisition of liquidity from various pools for a whole suite of derivatives, making the uphill battle of coverage a far less difficult one.

When Tapio governance launches, new projects can also contribute single-side liquidity (e.g. X Token) to Tapio Protocol in order to earn TAP tokens which can then be used as voting rights to direct liquidity away from the common synthetic pool to the application’s own pool (e.g. X-tDOT) - a far more cost effective way to bootstrap liquidity.