Tapir points reward two types of eligible activity on the Zircuit_zvUSDC 261214 market: holding Depeg Protected (DP) or Yield Boosted (YB) positions, and providing liquidity in the DP/YB automated market maker (AMM).

The important distinction is between raw points and finalized points. Raw points are calculated from eligible activity. They can still be reduced by pool-level caps, proportional scaling, validation, exclusions, or a successful challenge. Once that process is complete, the ledger records the finalized amount.

Under the current program rules:

Every finalized Tapir point converts into one TPR token (1:1).

That conversion rule does not give raw or provisional points a cash value, and it does not set a TPR launch date, market price, liquidity level, or regulatory treatment.

The pool is live on Base and open for partner participation. The coordinated public limited-access launch took place on September 22. Joining the pool before point activation does not itself earn points for those earlier days.

The live pool

Zircuit_zvUSDC 261214 is on Base. It was deployed on 1 September 2026 at 09:19:33 UTC with a 104-day onchain term and matures on 14 December 2026 at 09:19:33 UTC, giving approximately 83 days remaining at the September 22 public launch. AMM swaps are planned to pause on 11 December, three days before maturity. Later entry shortens the remaining term; the public announcement does not move maturity.

The underlying Zircuit Finance vault share continues to accrue variable yield. That yield is separate from Tapir points and can change over time.

Point eligibility starts on 25 September 2026 at 00:00 UTC, as set out in the published activation notice:

• Eligible AMM fee growth begins counting from that timestamp.

• Holding points require a complete UTC day, so the first eligible holding day is 25 September 2026. There are 80 complete eligible days through 13 December.

Two ways to generate raw points

1. Hold DP or YB

The September 10 policy approval sets the opening holding multiplier at α = 0.02 raw points per eligible dollar-day.

The calculation uses the minimum combined eligible DP and YB principal that a participant economically owns throughout a complete UTC day, including eligible principal in attributable liquidity positions without double-counting it. A balance held for only part of the day does not count as a complete day.

For this pool’s points accounting, one zUSDC is valued at $1. The value of a zvUSDC vault share is derived from how much zUSDC the vault reports it can redeem for at the approved sampling block. This accounting convention does not promise a $1 market or redemption price for zUSDC and does not change depeg settlement. The examples below use this points-accounting value.

For example, an eligible position with a constant value of $100,000 for seven complete UTC days generates:

0.02 × 100,000 × 7 = 14,000 raw points

This is before target scaling, validation, exclusions, challenge, and finalization.

2. Provide DP/YB AMM liquidity

The approved AMM multiplier is β = 116 raw points per eligible dollar of fee growth. It is retained under an approved exception with a 40% per-owner AMM target cap and an external-volume cap. Automatic β increases are disabled under that exception.

AMM points follow eligible fee growth. They are not calculated simply from the amount deposited or from headline trading volume.

The pool configuration uses a planning example with $100,000 of liquidity, 10% daily turnover, and a 0.1415% swap fee over seven days:

$100,000 × 10% × 7 × 0.1415% = $99.05 of fees

$99.05 × 116 ≈ 11,490 raw points

The AMM fee is dynamic, so this is a worked planning example rather than a forecast.

An eligible liquidity position can generate both holding and AMM points when it satisfies both sets of rules. The streams are calculated separately. This is not an automatic “2×” reward.

Targets cap the epoch total

Each epoch has separate pool-level targets for holding points and AMM points. Each target caps its own channel; it is not a promised payout.

• At or below target: raw points are not reduced by target-cap scaling. Eligibility, validation, exclusions, challenge, and finalization still apply.

• Above target: raw points are reduced proportionally so the finalized epoch total does not exceed the target.

If an epoch produces 150% of its target in otherwise eligible points, proportional scaling reduces each participant’s amount to two-thirds. No participant jumps ahead of another through that step. On the AMM side the caps come first, so the scaling factor is computed from the amounts that survive the per-owner and external-volume caps, not from the raw total. Where a cap bites hard enough, the surviving total can fall below the target and no scaling is applied at all.

The first four launch epochs are excluded from feedback. The first eligible observation is Epoch 5 and the earliest resulting adjustment is Epoch 7, subject to finalization and the program’s limits and controls. Automatic β increases remain disabled under the approved exception. Adjustments cannot change points retrospectively.

The revised program starts at global Epoch 1 on September 25 at 00:00 UTC. These approved opening caps have passed the free-budget check and are registered against the program budget:

Epoch 1 (25 Sep–1 Oct): 7,000 holding / 2,000 AMM.

Epoch 2 (2–8 Oct): 14,000 holding / 3,600 AMM.

Epoch 3 (9–15 Oct): 21,000 holding / 4,900 AMM.

Epoch 4 (16–22 Oct): 28,000 holding / 5,800 AMM.

Across those four epochs, the approved combined cap is 86,300 points. The approved 12-epoch schedule totals 314,700 points (278,000 holding and 36,700 AMM), including a final three-day holding-only tail. The allocation ledger records the full 314,700-point schedule as committed, leaving 119,685,300 of the 120,000,000-point program budget free. The target schedule controls the maximum finalized total for the pool in those epochs. It is not a minimum distribution.

Finalization and unlock

Raw calculations remain provisional until all finalization requirements are met, including eligibility, integrity checks, exclusions, target scaling, budget checks and challenges. A finalized ledger is immutable. Closing a challenge window alone does not make points final.

Tapir plans to announce its token generation event (TGE) and its date when protocol total value locked (TVL) reaches $10 million. The proposed schedule and any announced date may change. This is a protocol-wide milestone, not the target for this individual pool, and reaching it does not trigger an immediate TGE.

The applicable vesting and unlock terms for this pool have not yet been announced. The fixed 1:1 conversion does not mean tokens are immediately claimable.

The current specification allows earning ledgers to finalize before TGE and unlock dates are announced. Withdrawals require both finalization and unlock. The proposed unlock follows the original daily earning sequence from a separately announced start, expected shortly after TGE/public sale; this article does not announce an unlock schedule or a claim date.

Risks still apply

Points do not remove the risks of the underlying position. Tapir is market-priced risk transfer, not insurance. The main risks are:

• DP protection limits. DP receives priority under the settlement formula when the configured oracle records a depeg at resolution, but the formula has a structural cap. DP holders can still take a loss.

• YB first-loss exposure. YB takes first-loss exposure under that formula and can lose its full tranche value in a sufficiently severe recorded depeg.

• Liquidity provider exposure. LPs face price-range and inventory risk. Inventory can concentrate in the losing side, and trading income may not offset losses.

• Underlying vault risk. Strategy losses, valuation errors, or withdrawal restrictions at Zircuit Finance can affect the zvUSDC backing the pool, as can its bridge, network, and USDC dependencies.

• Oracle and operator risk. Settlement depends on the vault’s own redemption quote, USDC price feeds, and operator activity. Incorrect data, missing data, or admin actions can affect or delay resolution.

• Exit and timing risk. Limited liquidity, pauses, and settlement waits can delay an exit or make it more expensive.

• Smart contract risk. Tapir’s contracts, the vault, and their dependencies can fail.

Read more before participating:

• Zircuit USDC pool page, Risks: pool-specific risks, oracle configuration, and contracts.

• Zircuit Finance USDC Vault Risk Analysis: Tapir’s analysis of the underlying vault’s investments, withdrawals, valuation, and controls.

• Security & Audits: Tapir’s risk overview, audit reports, and administrative powers.

• Zircuit Finance security: Zircuit’s published audit reports for its vaults, bridges, and strategies.

Quantstamp reviewed the stated December 2025 code versions. Hashlock reviewed the later code path and final fixes through 29 July 2026. The deployment-specific independent review of the atomic settlement executor, required by the September 16 operational checklist, has been completed. Audit scope matters, and audits are not assurances of safety. Monitoring can pause AMM swaps on configured triggers, but it cannot prevent or reverse a loss.

Access and current terms

The market is live on Base and open for partner participation, following the public limited-access launch on September 22. Point earning starts on September 25 at 00:00 UTC under the published activation notice. Request access, or use your existing Tapir contact. Before participating, request the current pool configuration, points specification, eligibility terms, audit reports, and risk analysis. General protocol documentation is available at docs.tapir.money.

Important information. This article is a dated summary, not an offer, solicitation, recommendation, or financial, legal, tax, or investment advice. Tapir points are incentives, not vault yield or an annual percentage yield. Raw and provisional points are not entitlements. Multipliers, targets, eligibility, and schedules can change prospectively under the current program rules; finalized ledgers are immutable after the challenge process. The 1:1 conversion applies to finalized points and does not imply a cash value, TPR launch date, market price, liquidity, or future return. Participation remains subject to eligibility, anti-manipulation controls, and jurisdictional restrictions. Users can lose some or all of their capital. The figures above were checked against the September 18, 2026 configuration, whose policy was approved on September 17. Its fee and turnover examples are planning assumptions, not current quotes or forecasts.

By the Tapir team

Zircuit Finance is an onchain yield platform that pays institutional-grade yield on USDC and USDT, built so a depositor can actually understand where that yield comes from. The structure behind it is unusually disciplined for DeFi (decentralized finance). Capital is deployed to regulated asset managers including Wisdomtree, Monarq Asset Management, Forteus, FalconX, B2C2, and Fidelity; the protocol holds senior-creditor protections over its loans, and the smart contracts are independently audited. Zircuit Finance was incubated by a team from Quantstamp, which has secured more than $500 billion in assets across 1,300+ audits.

That is a security stack built layer by layer. This article is about a new layer being added to it, one that no protocol can build from the inside, and what it lets a Zircuit Finance holder do that they could not do before.

First, what a depeg actually is

A depeg happens when a token trades below the price it is designed to track. A US-dollar stablecoin that slips to $0.95 has depegged by 5%. A liquid staking token (LST) that loses its peg to the underlying asset after a slashing event has depegged. The dollar figure can look small per token, but the event is the single most common loss event in DeFi.

The numbers say the rest. Moody’s counted 1,914 depeg events across the top 25 stablecoins in the first nine months of 2023 alone, 609 of them in large-cap names, counting any move greater than 3% inside 24 hours. Between November 2020 and November 2025, depeg events cost holders an estimated $1.1–3.3 billion, from our own per-event research across 60+ events, and that range excludes the Terra and IRON collapses, which were category failures rather than peg deviations. And yet, of the $150 billion-plus in yield-bearing DeFi assets (DefiLlama, Q4 2025), under 0.2% carries any form of protection against this. That last figure is our own derivation, and it is simple arithmetic: the entire on-chain protection sector holds roughly $110–150 million of capital against $80–150 billion of exposure. The most common way to lose money in DeFi is also the least hedged.

The reason is structural, not accidental. We will come back to it.

The layer that no yield structure can build on its own

Zircuit Finance issues omnichain receipt tokens, zvUSDC and zvUSDT, that accrue yield through a rising price-per-share rather than by changing in quantity. The underlying capital sits across regulated venues with senior-creditor terms and on-chain liquidity buffers. The design is built precisely to keep that receipt token tracking par, and every layer of the stack is there to make that hold.

What no protocol can add from the inside, however well engineered, is a counterparty. A market needs someone external who wants the opposite position. If a holder would rather give up a slice of yield in exchange for protection, somebody else has to want that slice enough to take the risk on. That person cannot come from within the vault. This is the layer that has been missing across the whole category, which is why so much of that capital sits unhedged, and it is exactly what Tapir adds.

What Tapir is (and what it is not)

Tapir is a depeg protection marketplace for yield-bearing tokens. It takes a single yield-bearing position and splits it into two tradable claims:

• DP (Depeg Protected): the senior claim. It provides protection at settlement against qualifying depegs up to the structural 50% limit. Beyond that, DP also takes losses.

• YB (Yield Boosted): the junior claim. It absorbs first-loss exposure to a depeg, and in exchange it earns a boosted yield.

The feature that makes this work where nothing else has: every side keeps 100% of the base yield. The underlying keeps earning base yield, but the DP buyer pays a market-priced protection premium. Fees also affect net returns. The YB holder takes on the risk and also keeps the full underlying yield, plus the premium. A liquidity provider standing between them keeps it as well, plus the trading fees. No capital sits idle waiting for a claim. Every dollar in the system stays productive.

For readers coming from traditional finance, the closest analogue is a credit default swap (CDS): an instrument that lets one party transfer the risk of a credit event to another for a price. CDS notional outstanding stood at approximately $11.0 trillion at end-December 2025 (Bank for International Settlements, Table D10.1). Tapir is the on-chain equivalent for the depeg risk in DeFi yield assets, with one difference that matters below.

A word on what Tapir is not. It is not insurance, and it has no policy and no policyholder. Tapir allocates depeg exposure between claims backed by the same yield-bearing position, without requiring a separate idle claims reserve. That capital efficiency is the benefit for Zircuit Finance holders who want to buy protection or earn a premium for accepting first-loss exposure.

The honest part

We care about saying this plainly. This is a risk product, not insurance and not risk-free. It carries smart-contract risk, market risk, liquidity risk, APY (annual percentage yield) risk, and depeg risk, and YB holders can lose principal in a depeg event. That is the whole point of the junior claim: YB holders absorb the first loss under the settlement formula, while DP holders retain risk beyond the protection limit and both sides retain protocol and underlying-asset risks.

Costs are short to list. The pool charges a 0.22% redemption fee when the market ends, and swaps carry a fee that shrinks as expiry approaches. There is no deposit fee, and the price of protection is paid to the other side of the trade rather than taken out of your yield.

Tapir’s contracts have been independently audited by Quantstamp and Hashlock. Audits reduce risk; they do not eliminate it. None of this is financial advice. What this layer offers is not the disappearance of risk. It is the ability to see that risk clearly, price it openly, and choose your side of it.

Why this fits the Zircuit Finance position specifically

Zircuit Finance already does the hard part on the supply side: it sources real, durable yield from regulated managers and protects its position as a creditor. What no vault can do alone is give a zvUSDC holder a clean, market-priced way to decide how much depeg risk they want to carry.

With Tapir sitting next to the Zircuit Finance USDC position, the same deposit becomes a choice rather than a single fixed exposure:

• A treasury or a conservative allocator can hold DP and retain exposure to the Zircuit base yield while paying a protection premium. Protection applies at settlement to qualifying depegs up to the structural 50% limit; larger losses affect DP too.

• A yield-seeker who is comfortable underwriting that exposure can hold YB, earn the Zircuit base yield, and collect a premium on top for standing behind the protected side.

• A liquidity provider can back the market itself, supplying DP/YB liquidity and earning the trading fees on top of the base yield.

Tapir does not replace the vault. It expands what a Zircuit Finance position can do. The yield and the discipline behind it stay exactly where they are; the new part is a market on top, where each holder shapes their own exposure.

There is a second thing this layer produces. Once DP and YB trade against each other, the spread between them is a live, on-chain price of how the market rates that risk, readable by anyone from day one. A tight spread means protection is relatively inexpensive at that moment; it does not by itself establish that the underlying risk is small.

How the price of protection gets set

Here is where Tapir departs from both traditional collateralized protection models and a static fee schedule. The cost of protection is not set by an underwriter’s committee or a fixed rate card. DP and YB trade against each other on an automated market maker (AMM), so the market sets the price of protection in real time, continuously.

The DP/YB spread shows the market price of transferring depeg exposure. It reflects risk expectations, liquidity, incentives, and time to maturity; it is not a direct measure of depeg probability. Supply and demand determine the relative price of the two claims.

A simplified, illustrative example shows the shape of it. Zircuit Finance publishes a target range of 8–11% APY on its vaults, variable and not guaranteed. Take a round 9% from inside that range, purely to show the mechanic. A holder who wants protection buys DP: they keep the full base yield but give up a slice of it, set by the market, as the price of protection, netting something like 7.5% with depeg protection at settlement up to the structural 50% limit. A holder who wants more yield buys YB: they earn the same base plus that premium, netting something like 10.5%, in exchange for absorbing the first loss if a depeg occurs. In this simplified example, the base yield sits between the two returns: DP pays a premium and YB receives it. Actual returns depend on prices and fees. The roughly 3-point gap between the two is not a fee Tapir charges. It is the market’s price for moving the depeg risk from one holder to another. These are illustrative figures rather than a quote: the numbers move with the market, and it is the mechanic that stays.

Settlement without a claims process

The other place Tapir breaks from traditional protection models is the moment of truth. There is no claim to file, no adjuster, no governance vote on whether a depeg “counts.”

Resolution is parametric and rules-based. After a market expires and a short cooldown passes, with checks on the age of the oracle price, the outcome is computed on-chain directly from oracle prices, comparing a high-watermark to the resolution price. Anyone can trigger it. The payout follows from the rule, not from anyone’s discretion.

This design also makes the market solvent by construction. At resolution, the DP and YB redemption factors always sum to the same fixed total, so a depeg only redistributes value between the two sides. It never creates a shortfall the system has to cover from a reserve it might not have. There is no separate claims reserve to exhaust, although contract and oracle risks remain. For a protection product, that structural property is worth more than any marketing promise.

Where it stands

The first Tapir depeg protection market is live in limited access, on the Zircuit Finance USDC position. Access is deliberately staged while the market builds depth, because a protection market is only as good as the liquidity standing behind it. The public limited-access launch is September 22, 2026. Tapir points are planned to start on September 25 at 00:00 UTC, subject to activation readiness. Eligible DP, YB, and liquidity-provider activity earns points under the published program rules.

For a category that has gone largely unhedged since 2021, the more interesting milestone is not the launch itself. It is that, for the first time, a holder of an institutional-grade yield position can keep earning the underlying yield, with net returns reflecting premiums and fees, and still decide, in an open market, exactly how much of the depeg risk they want to carry. That is what the new layer adds.

Request access · Learn more about Tapir

Points programs didn’t disappoint because incentives don’t work; they disappointed because their issuance was hard to model and their rewards were easy to game. Most incentive programs tend to break in predictable ways: they issue rewards without a hard budget, pay for metrics that are easy to game, or rely on volume signals that invite wash behavior. Tapir’s incentives design starts from the opposite premise: we expect & encourage users to game the system.

Every incentive program is a game for users to play. The issue is that most of them are just badly designed. They tended to reward metrics such as “usage” or “user growth” which, even if they could be measured in an anonymous system, didn’t seem to help the protocol in the long run.

In order to provide good UX (low spreads) we need deep enough liquidity and that is exactly what we incentivize. We have clear liquidity targets for each depeg pool and its associated market, and a control mechanism that dynamically adjusts rewards to achieve them.

Emissions are budgeted per pool, AMM rewards are linked to fees earned, and both streams are capped to prevent unwanted token dilution. This article explains the mechanism, why it was chosen, and how to participate without guessing.

Key Takeaways

• Modelable emissions, treating points as underwritable token issuance: 120M TPR points budget, per-pool caps, and clear rules.

• Incentives are organized by Depeg Pool: every pool has a corresponding DP/YB token pair plus an associated AMM that trades that pair. Both the pool and its AMM have concrete targets for each epoch.

• Two types of incentives: TVL rewards are time-bound, and AMM rewards are utility-driven (fee-based).

• Multipliers are the steering wheel to attract activity in a pool.

• Targets are the emission budget (hard cap); scaling enforces the cap if demand is too high.

• Target APRs: ~20–22% APR for passive TVL holders, ~20–22% APR for AMM LPs on fees, and ~40%+ combined APR for LPs earning both streams (before base yield and subject to pool utilization and scaling caps).

• Points convert to TPR at a fixed 1:1 ratio and are time-locked before conversion; you can earn quickly, but you cannot exit instantly. Emissions you can underwrite

It’s broadly recognized in DeFi that most points and incentives programs often pay for TVL and activity without filtering for durability or conviction. Behaving as though emissions were a no-cost lottery, airdrops tend to reward mercenary behavior: “paper TVL” first, post-TGE sell pressure later.

Emissions you can Underwrite

It’s broadly recognized in DeFi that most points and incentives programs often pay for TVL and activity without filtering for durability or conviction. Behaving as though emissions were a no-cost lottery, airdrops tend to reward mercenary behavior: “paper TVL” first, post-TGE sell pressure later.

The track record of points programs is mixed at best: misalignment, dilution, wash trading, opacity, fragile liquidity. Still, they exist for a reason, and Tapir’s design is an attempt to keep the benefits while fixing the failure modes. Protocols need a way to bootstrap liquidity and reward early risk-taking. Tapir is trying to do that in a way that allocators can actually model.

Tapir’s liquidity incentives pay for two things that the protocol can actually measure and the market can actually price. The idea is to optimize for both sticky and useful liquidity. We also cap emissions by design so dilution stays bounded and forecastable.

Tapir treats incentives as an underwriting problem: each pool has a weekly points budget, and if demand exceeds it, everyone takes the same proportional haircut. AMM rewards track fees earned rather than idle liquidity. Multipliers then reprice each pool weekly to keep participation near target. TVL incentives buy time-sticky participation (positions held through full UTC days) while AMM incentives buy useful liquidity (fees earned, i.e., trades actually settled).

We calibrate each pool to target the following incentive APRs (in TPR value):

• ~20–22% annualized on TVL holdings (DP/YB held through full UTC days).

• ~20–22% annualized on AMM liquidity (fees earned).

• ~40%+ combined for LPs earning both streams.

• Maximum target range: up to ~100% APR in exceptional bootstrapping phases.

These targets are pool-specific, and are implemented through:

• α (TVL multiplier) → controls points per dollar-day.

• β (AMM multiplier) → controls points per dollar of fees earned.

Under the weETH launch configuration, for example:

• α = 0.02 → ~21.8% TVL incentive APR at $0.03/TPR.

• β = 60 → ~19.7% AMM incentive APR under baseline turnover assumptions.

These APRs are targeted, not guaranteed. They are also subject to a pool’s demand based on the weekly emissions budget. Finally, these rewards are also independent of the underlying asset’s base yield (which remains fully productive).

Why TVL (Liquidity-based) Incentivization

TVL incentives are the protocol’s budget to onboard the first cohort of users that will make the product usable at scale. The goal is to grow the TVL, as DP and YB holders are the providers of pool’s inventory and risk capital. Designed to reduce “paper TVL” behavior, TVL points only accrue on full UTC days, with transfer resets. This will improve execution and capital efficiency.

Why AMM (Fee-based) Incentivization

Tapir’s AMM is the mechanism that makes the price of depeg protection a market variable. Each depeg pool has a corresponding market with a DP/YB AMM that must clear trades in the background to function. Without enough liquidity depth, users face slippage and cannot reliably move between “protection” (DP) and “yield” (YB).

Every DP or YB buy implies a sale of the other side. When a user chooses one exposure, the “undesired” exposure must be absorbed by the market. In Tapir, that routing happens through the pool’s AMM. Thin liquidity therefore turns the product into a spread problem.

By setting fee-based rewards, Tapir discourages wide, unused ranges and makes wash trading uneconomic. Moreover, LPs can earn both streams, as AMM LP positions count toward TVL accounting as well.

How you earn: two streams, one principle

Tapir ensures users are rewarded for 1) held TVL and 2) fees earned. You earn 1) TVL points by holding DP and/or YB tokens in a given pool, and you earn 2) AMM points by providing liquidity to the pool’s AMM.

For TVL points, Tapir only counts a position if you hold it for a full UTC day. It takes snapshots of user balances at 00:00 UTC. Transfers reset the holding period for the transferred amount. Positions held for less than 24 hours earn zero for that day. Thus, daily TVL points are computed as (DP + YB balance) × asset price × a pool multiplier, but only if you hold through the full day.

Think of TVL points as:

(Your dollar exposure, per day) × (a pool-specific “points per dollar” rate).

Concretely, each day:

1. Tapir looks at your DP + YB balance at the daily snapshot.

2. It multiplies by the asset’s USD price to get a dollar value proxy.

3. It multiplies by a pool TVL multiplier (call it α) to turn dollars into points.

4. If you didn’t hold the full day, the result is forced to 0.

Then Tapir sums those daily values across the days in the epoch to get your raw TVL points for the week.

For AMM points, liquidity providers are rewarded based on fees they actually earn, not on liquidity size. This is a choice to avoid paying for liquidity that never trades.

Think of AMM points as:

(Your fees earned this week) × (a pool-specific “points per fee-dollar” rate).

Concretely, for the epoch:

1. Tapir totals the USD fees you earned as an LP in that pool (call this F).

2. It applies a pool AMM multiplier (call it β) to convert fees into points.

3. It multiplies by the underlying asset’s USD price at epoch end.

Together, the program optimizes for removing the incentive to post wide, unused liquidity ranges, tying rewards to protocol utility. It makes wash trading expensive because fees are real costs, and avoids last-minute time-weight gaming.

Caps and adaptive targets

Each pool has two per-epoch targets set by governance: a TVL point target (max points paid for holding DP/YB), and an AMM point target (max points paid for LP fees). These targets define the pool’s points budget per epoch. If a pool overshoots its target, Tapir scales everyone down to the budget; if it undershoots, it simply pays full (unscaled) incentives to everyone.

• Pool TVL target: 1,000,000 points

• Raw points generated: 1,800,000

• Scaling factor: 1,000,000 / 1,800,000 ≈ 0.556

• Each participant’s final points get multiplied by ~0.556, and the pool distributes approximately 1,000,000.

Therefore, your points depend on your share of activity and how crowded the pool is relative to its target. If three holders had raw points of 800,000 / 600,000 / 400,000, then final points become roughly 444,444 / 333,333 / 222,222, totaling approximately 1,000,000.

Each pool has two multipliers that adjust every epoch:

• α for TVL points; how many points you earn per $ of TVL held (per day).

If you assume a reference value per point, say $0.03/TPR for modeling, you can translate α into an implied APR: α × 7 × 52 × (TPR price). For instance, in Tapir’s weETH pool, where α is set to 0.02, it would be targeting ~20–22% reward APR in token value.

Thus, $1,000,000 held for 7 days earns 0.02 × 1,000,000 × 7 = 140,000, where token value ≈ 140,000 × $0.03 = $4,200 ($4,200 / $1,000,000 ≈ 0.42% weekly ≈ 21.8% APR).

• β for AMM fee points; how many points you earn per $ of AMM fees earned.

Following the example of Tapir’s weETH pool, assuming 30% of TVL in the AMM and 10% daily turnover (volume/TVL) with a 0.3% fee tier, the expected weekly fees can be modeled as: avg AMM TVL × turnover × 7 × fee tier. In the weETH configuration, where β is set to 60, it’s also calibrated to produce ~20–22% reward APR on the AMM portion under those assumptions.

If a pool undershoots its target, the multiplier rises in the next epoch. If it overshoots, the multiplier falls. This allows Tapir to react to true demand, dampening adjustments with γ = 0.5 by default (i.e., the new multiplier moves only halfway toward the fully implied adjustment, smoothing epoch-to-epoch volatility). Governance can set γ anywhere in the 0.1–1.0 range, and multipliers are bounded to prevent extreme outcomes: α ranges 0.005–1.0; β ranges 1.0–1,000.0.

How Big Is The Reward Boost

Multipliers adjust each epoch based on over/undershoot.

• Overshoot → incentives get sparser next epoch.

• Undershoot → incentives get more plentiful.

The system tries to converge on “enough liquidity, without runaway emissions.” Thus, in Tapir, the “boost” can only come from two levers:

1. Higher initial multipliers (α and/or β)

   1. TVL: raw points scale linearly with α.

   2. AMM: raw points scale linearly with β (raw AMM points = β × fees).

2. Higher per-epoch pool targets (the cap)

   1. Targets determine whether participants get haircutted by oversubscription scaling (κ). Higher targets reduce the chance of κ < 1.

If the pool is not oversubscribed (κ ≈ 1), increasing α by 50% increases TVL points by ~50%; increasing β by 50% increases AMM points per fee dollar by ~50%.

On the contrary, if the pool is oversubscribed (κ < 1), raising targets can matter as much as raising multipliers because it pushes κ back toward 1.

Private mainnet launches next week with boosted rewards for early adopters. The boost is implemented by setting higher initial pool parameters for the first epochs: TVL rewards use elevated initial α and AMM rewards use elevated initial β values, alongside higher per-epoch pool targets. Exact boost parameters will be published at mainnet launch.

Practically, this increases points per dollar-day (TVL) and points per dollar of earned fees (AMM), subject to the same pool-level emission caps and scaling if demand crowds in.

You can earn quickly; you cannot exit instantly

Tapir time-locks points before conversion to TPR. This allows it to spread out unlocks over time and reduce one-day supply shocks. It also forces participants to underwrite the protocol’s medium to long-term path, not just its launch.

• Earliest earners face a 90‑day cliff from TGE.

• Points earned before TGE unlock smoothly across TGE+90 to TGE+180 (linear schedule based on earn date).

• Points earned on/after TGE follow a 180‑day lock from earn date.

• Points remain non-transferable until you convert them to TPR.

As an allocator, you can choose your strategy based on your desired exposure: a) TVL (DP/YB holding) fits allocators who want lower operational overhead and can hold through daily cutoffs, b) AMM LPing (fee-based points) fits allocators who can manage ranges, inventory, and rebalancing, or c) for running both in parallel.

LPs earn both TVL points (for tokens in LP position) and AMM points (for cumulative fees earned):

This makes LP provision siginificantly more attractive then passive holding, incentivizing deep liquidity

For each pool you deposit, track:

• TVL and AMM targets (points budget).

• Whether the pool is oversubscribed (scaling factor <1).

• α and β multipliers and their direction of change (undershoot → up; overshoot → down).

• Your own unlock timeline (pre‑TGE vs post‑TGE earn dates).

The Takeaway

Tapir treats points as a controlled distribution system, not a marketing meter. It uses:

• Fee-based rewards to pay for liquidity that clears trades.

• Time-based eligibility to block snapshot games.

• Pool-level targets and scaling to cap emissions.

• Adaptive multipliers to steer participation without blowing out dilution.

If you allocate, you do not need to guess the program’s intent. You can read the budget, watch oversubscription, and size positions based on the same inputs Tapir uses to calculate rewards.

Public testnet is live. Use it to get the opportunity to participate in the private mainnet, get familiar with weekly targets and crowding haircuts.

References

Tapir Protocol Docs

Tapir Protocol Litepaper

Tapir Protocol: Point System & Liquidity Incentive Specification

Tapir Protocol: weETH Pool Configuration v1.1

What is Depeg?
A depeg occurs when a token trades below the price it is designed to track—for example, a USD stablecoin dropping to $0.95.

Tapir is an on-chain structured product that splits a yield-bearing position into senior and junior claims, enabling participants to pay (or earn) an explicit depeg protection without relying on an underwriter’s balance sheet. The goal is to offer counterparty-minimized protection with transparent, pre-defined settlement.

In Traditional Finance, this confidence rests on regulation, capital requirements, supervision, and resolution frameworks. In DeFi (Decentralized Finance), many risk-transfer products operate without comparable ex-ante supervision or ex-post enforcement (stablecoin depegs, LST discounts, etc.). This creates a structural tension between capital efficiency and counterparty risk that existing models struggle to resolve.

This article compares two main risk mitigation models and introduces the Risk Trilemma framework.
It examines how tranching mechanisms can achieve trust-minimized risk protection without sacrificing capital efficiency and why it is much better suitable for the DeFi environment.

Underwriting Models: A Taxonomy

Risk underwriting falls into two categories, each with distinct capital structures and counterparty risk profiles. We focus on (I) balance-sheet underwriting and (II) fully collateralized underwriting. Mutualized risk pools and discretionary-claims models introduce different design constraints (governance, adjudication, operational processes) and are not addressed here.

Balance Sheet Underwriting

Balance sheet underwriting is the dominant model in traditional risk underwriting. The underwriter assumes liability on its own balance sheet without designating specific assets against individual policies. Claims are satisfied from general capital reserves, with no recourse to ring-fenced collateral.

This model is effective when claims are diversified and weakly correlated. A single unit of capital can support multiple policies simultaneously as long as tail events are rare and uncorrelated across the book. When claims become correlated (market-wide stress, shared collateral types, systemic depegs), effective leverage decreases, and solvency becomes the binding constraint.

The principal limitation is counterparty risk. Policyholders have limited visibility into the underwriter’s risk management, asset-liability matching, or exposure concentrations. In correlated-claim scenarios—systemic events, market-wide depegs, or cascading liquidations—the underwriter’s capacity to honor obligations becomes uncertain. The policyholder’s claim is an unsecured liability against the underwriter’s general estate.

Fully-Collateralized Underwriting

Fully-collateralized underwriting inverts this structure. The underwriter posts designated collateral against each policy, granting the policyholder direct recourse to earmarked assets upon a qualifying event. This approach mirrors the funded structures commonly employed in insurance-linked securities and collateralized reinsurance markets.

This model eliminates counterparty risk, since the protection buyer holds a secured claim against identifiable collateral, verifiable on-chain in DeFi contexts. Settlement becomes deterministic rather than dependent on the underwriter’s solvency or willingness to pay.

The cost is capital intensity. Coverage capacity is constrained by posted collateral and associated liquidity terms (e.g., withdrawal and settlement mechanics). While collateral may be yield-bearing, the binding constraint is still funding: protection capacity must be financed up front, and that cost is ultimately reflected in premiums.

The Risk Trilemma

These two models represent opposite ends of a spectrum, each optimizing for different properties at the expense of others. In regulated markets, balance sheet underwriting predominates because regulatory infrastructure provides quite effective mitigation of counterparty risk. Solvency requirements, statutory reserves, and supervisory oversight create accountability mechanisms that substitute for direct collateralization.

Decentralized finance lacks an equivalent enforcement infrastructure. Smart contracts can enforce rules, but they cannot compel an undercapitalized counterparty to produce funds that do not exist. This environment surfaces a fundamental trilemma—three desirable properties that prove difficult to achieve simultaneously:

1. Capital Efficiency: The ability to provide coverage without requiring equivalent collateral lockup, preserving capital productivity

2. Counterparty Risk Elimination: No reliance on underwriter solvency, creditworthiness, or willingness to perform

3. Coverage assurance: Assurance that protection against the claim will be honored. Both underwriters will have the intent and the means to honor their claim

Balance-sheet underwriting is capital efficient but introduces credit exposure to the underwriter. Fully collateralized structures reduce credit exposure but impose higher capital intensity and liquidity constraints.

The question becomes whether an alternative structure can optimize across all three dimensions.

Tranching as a Resolution Mechanism

Structured finance has long employed tranching to redistribute risk across investor classes with heterogeneous risk appetites. The same principle applies to decentralized risk protection markets.

Tapir Protocol implements this approach by bifurcating yield-bearing tokens into two subordinated tranches:

• DP (Depeg Protected): Senior tranche entitled to par redemption, protected against depeg events up to a defined threshold

• YB (Yield Boosted): Junior tranche absorbing first-loss exposure in exchange for enhanced returns

Both tranches maintain claims on identical underlying collateral. Both continue to accrue the underlying yield throughout the protection period. The distinction lies solely in the loss waterfall: depeg losses are allocated first to YB holders until their tranche is exhausted, with DP holders bearing residual losses only thereafter.

The market price differential between DP and YB tokens reflects the implied cost of protection—effectively the premium that risk-averse participants pay to risk-tolerant participants for assuming subordinated exposure.

Mechanism Properties

This tranched structure delivers several properties that address the Risk Trilemma:

Counterparty Risk Elimination. Both DP and YB positions represent claims on actual underlying collateral held within the protocol. No party relies on an external underwriter’s balance sheet or solvency. Settlement is deterministic, governed entirely by smart contract logic and observable price feeds.

Full Collateralization of Senior Tranche. DP holders maintain a secured position backed by the combined underlying of both tranches. In a depeg scenario, their claim is satisfied from YB holders’ collateral allocation before any loss accrues to the senior tranche.

Risk-Adjusted Compensation for Junior Tranche. YB holders receive the underlying yield plus an implicit risk premium derived from the DP/YB price differential. This premium compensates for their first-loss exposure and elevated risk profile.

Capital Efficiency Through Continuous Yield Accrual. Unlike traditional collateralized protection models, where locked capital sits unproductive, both tranches remain fully deployed in the underlying yield-generating strategy. Neither protection buyers nor protection sellers sacrifice capital productivity. The protection mechanism operates as an overlay on existing yield positions rather than requiring dedicated reserve capital.

Algorithmic Claim Resolution. Settlement terms and depeg thresholds are codified at position inception, with claim execution governed entirely by smart contract logic and oracle price feeds. No manual adjudication, governance vote, or counterparty approval is required. This deterministic payout structure eliminates the operational and reputational risks inherent in discretionary claims processes.

Oracle Risk Mitigation. Deterministic settlement depends on price feed integrity. To mitigate oracle manipulation and single-point-of-failure risk, the protocol employs multiple independent oracle sources and applies price sampling across the five days preceding pool maturity. This time-weighted approach reduces exposure to transient price dislocations, flash-loan-driven manipulation, and individual oracle failures.

Structural Limitations

Because DP holders’ claims are secured against YB holders’ allocation, protection capacity is bounded by the junior tranche’s value. The protocol currently employs a symmetric 50/50 split between DP and YB tranches. Under this structure, the YB tranche can absorb depeg losses up to 50% of the high watermark price. Beyond this threshold, the junior tranche is fully depleted and residual losses pass through to DP holders.

The 50/50 ratio balances protection depth with junior tranche attractiveness. A larger junior tranche would extend coverage but dilute YB holders’ risk premium, reducing demand for the subordinated position. A smaller junior tranche would concentrate the premium but narrow the protection buffer. The symmetric split provides a natural equilibrium for the initial protocol version.

For most half-sane yield strategies, 50% buffer is more than enough. Higher losses represent extreme tail events typically associated with a fundamental protocol flaw—this coverage ceiling provides adequate protection for most risk management objectives.

Additionally, while smart contracts serve as the trust-minimisation layer that enables deterministic settlement, they introduce their own risk surface. However, Tapir meaningfully reduces aggregate smart contract exposure rather than adding to it. The smart contract trust assumption collapses into trust in a single codebase: Tapir’s own contracts(the core contract has 314 lines of code). Because the protocol protects against downstream depeg events, the security of the underlying yield platform becomes the hedged risk rather than an unhedged exposure.

This is especially relevant because the highest-yielding opportunities in DeFi are disproportionately available through newly launched protocols—platforms with limited track records and unproven codebases.

Without Tapir, an investor must perform rigorous due diligence on each new protocol, a burden that scales linearly with every opportunity pursued. With Tapir, due diligence on the smart contract dimension needs to be performed only once, rather than repeated for every new deployment.

Tapir’s safety is also independent of token economics, eliminating an entire class of economic exploit vectors common in yield-generating protocols. While smart contract risk cannot be fully eliminated, the protocol’s minimalism, auditability, and isolation from tokenomic complexity substantially reduce the attack surface relative to the multi-protocol exposure it replaces.

Comparative Analysis

The tranched model achieves a previously unavailable combination: counterparty risk elimination comparable to fully-collateralized structures, with improved capital efficiency relative to traditional collateralized models. Unlike balance-sheet underwriting—where capital efficiency derives from leveraging a single reserve across multiple uncorrelated policies—the tranching model preserves capital productivity through continuous yield accrual on all posted collateral. Neither protection buyers nor sellers sacrifice yield exposure to obtain or provide coverage. The cost is a bounded protection range rather than unlimited coverage.

* While we believe the 50% coverage is sufficient for most assets, subsequent protocol iterations are intended to extend protection capacity beyond the current junior-buffer ceiling—ultimately targeting full 100% depeg protection—subject to additional design and risk constraints.

Conclusion

The Risk Trilemma framework illuminates why traditional risk models translate poorly to decentralized environments. Balance sheet underwriting requires a trust infrastructure that does not exist on-chain. Full collateralization imposes opportunity costs that render protection economically unviable for many participants.

Tranching offers a third path. By restructuring claims on existing yield-bearing collateral rather than requiring dedicated capital reserves, protocols can deliver trustless risk transfer without sacrificing capital productivity. Both protection buyers and sellers maintain yield exposure while achieving their respective risk management objectives.

This represents a native DeFi primitive—not an adaptation of traditional models, but a mechanism designed specifically for the constraints and capabilities of programmable, permissionless financial infrastructure.

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