Benefits & Use Cases
By becoming the efficient liquidity standard for uniform assets on Polkadot and Kusama, Taiga can bring benefits to: Holders, Liquidity Providers, Traders and Application Builders.
Taiga synthetic assets can increase the usability of uniform assets (ie. DOT, LDOT, lcDOT) by unlocking liquidity from crowdloan and staking use cases. Example: tDOT is a synthetic asset that can be synthesized from DOT-LDOT and DOT-lcDOT on Acala. tKSM is another synthetic asset which is synthesized from KSM-LKSM on Karura. Holders can enjoy the juicy APR - without using token emissions, and relying solely on sustainable sources of yield. Furthermore, a user can hold tDOT/tKSM and then borrow aUSD on a money market using it as collateral, or simply mint aUSD directly on Acala/Karura, all the while still accumulating yield and fees on their synthetic assets.
While LPs are able to earn trading fees passively, with our synthetic assets, they’re able to also receive a pegged asset without an impermanent loss (due to the dynamic nature of the composition), which is also far more usable. For example, 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 Taiga 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/tKSM 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.
Our synthetic assets serve as an extremely efficient stable swap engine for DOT-DOT derivatives and KSM-KSM derivatives (ie. swap engine for DOT-LDOT, KSM-LKSM)
Our synthetic assets can seamlessly integrate with DeFi primitives:
- Collateral (ie. use tDOT/tKSM as collateral for margin trading)
- Lending (ie. Mint aUSD or borrow against tDOT/tKSM)
Siloed DOT/KSM liquidity on a parachain can be used to mint tDOT/tKSM, enabling dApps on the native parachain to support a single unified DOT/KSM standard
Thanks to the XCM architecture of the Dotsama network, our synthetic assets can naturally serve as a cross parachain swap mechanism