Super excited to introduce the first synthetic DOT to the Polkadot ecosystem!
tDOT aims to become the synthetic standard for the Polkadot ecosystem by unifying different formats of DOT derivatives to unleash maximum liquidity efficiency through:
If you are a building a Parachain or dApp and is looking for unified DOT liquidity, we can certainly help facilitate. Let’s chat!
As new Parachains continue to go live in the Polkadot and Kusama ecosystem, we are witnessing an increasing number of staking and crowdloan derivatives.
Acala — LKSM, LDOT, lcDOT
Bifrost — vKSM, vsKSM, vDOT, vsDOT
Parallel Finance — cKSM, sKSM, cDOT, sDOT
The vibrant selection of derivatives enables increased usability for DOT and KSM. However, it also introduces two major problems for the Polkadot and Kusama ecosystem as a whole:
Tapio & Taiga Protocol is motivated to maximize liquidity efficiency by removing silos caused by DOT and KSM derivatives. We believe introducing a synthetic standard to unify different forms of DOT and KSM liquidity can help realize the multichain vision of Polkadot and Kusama!
tDOT is the first synthetic DOT aimed at standardizing different formats of DOT derivatives for increased usability, yield and liquidity efficiency.
tDOT is backed by individual liquidity pools made up of native DOT and DOT derivatives*. tDOT provides a highly stable value peg against native DOT while enabling a high degree of composability with new and existing Parachains and dApps.
tDOT on Acala is currently made up of DOT and staking DOT. It is backed by the DOT-LDOT liquidity pool, which achieves the following:
*DOT derivatives will be referenced as xDOT throughout this article
tDOT enables the standardization of DOT liquidity siloed in staking and crowdloan applications. Furthermore, Parachains with DOT and xDOT liquidity can leverage tDOT and the Stable Asset system to achieve the following benefits:
Liquidity Providers and Holders
All tDOT will be minted on Acala as it serves as the primary DeFi hub on Polkadot. The Acala ecosystem has an abundance of use cases and economic value for tDOT as it holds a significant amount of Staking DOT and Crowdloan DOT.
The composition of tDOT is designed to support any DOT-xDOT asset pairs. Our plan is to introduce DOT-lcDOT as the next tDOT composition on Acala.
Each DOT-xDOT liquidity pool is a trading pair between DOT and xDOT. It allows a dynamic trading range between DOT and xDOT and also ensures the value of the pooled derivative is pegged to DOT.
Each xDOT represents a different form of 1 DOT in the Polkadot ecosystem (ie. LDOT ~ DOT, lcDOT ~ DOT). According to the Stable Asset algorithm, when the exchange rate between DOT-xDOT trades at 1:1, tDOT is 100% collateralized and is fully backed by 1 DOT.
When the exchange rate shifts, tDOT is over-collateralized and the collateral ratio increases as the exchange rate shifts further. Each DOT-xDOT liquidity pool can control how fast the collateral ratio increases with its own amplification coefficient parameter setting.
Since each DOT-xDOT liquidity pool can maintain peg of its own pooled derivative, it is a natural choice to unify these individual DOT derivative pools into tDOT.
Tapio is a synthetic asset protocol enabling efficient liquidity for staking, crowdloan and uniform assets. It is designed to remove liquidity silos by synthesizing different formats of derivatives into a highly usable synthetic asset on Polkadot. Taiga is the mirror implementation of Tapio on Kusama.
Tapio officially started in early 2021 when we received our first Web3 Foundation Open Grant. We are also the inaugural recipient for the Acala Ecosystem Grant. Our team is composed of engineers, financiers, security experts and serial entrepreneurs based in Canada, China and U.S.