Taiga is a synthetic asset protocol enabling efficient liquidity for uniform assets on Dotsama. It is designed to mitigate liquidity silos by synthesizing different formats of asset into a highly usable synthetic asset in the Dotsama ecosystem.
Taiga is a Parachain agnostic DeFi protocol. The inaugural integration on Acala & Karura, the DeFi hub of Polkadot & Kusama is designed to unleash maximum usability for assets with a uniform peg (ie. DOT, LDOT, LKSM, KSM). Taiga synthetic asset can be used in a broad spectrum of use cases (ie. collateral, liquidity bootstrapping) while maintaining the benefits of the underlying asset (ie. staking yield, crowdloan rewards)
By becoming the efficient liquidity standard for uniform assets on Dotsama, Taiga can bring benefits for Synthetic Asset Users, Liquidity Providers, Traders and Project Teams.
Synthetic Asset Users
Taiga synthetic assets can increase the usability of uniform assets (ie. DOT, LDOT, LKSM, KSM) by unlocking liquidity from crowdloan and staking use cases. Example: tDOT is a synthetic asset that can be synthesized from LDOT, tKSM is a synthetic asset that can be synthesized from LKSM. tKSM holders can use it as collateral to mint aUSD (Karura stablecoin) while keeping the underlying rewards generated from the liquid crowdloan application.
Liquidity Providers
Further to earning trading fees passively, Liquidity Providers receive a better pegged and usable synthetic asset in return for providing liquidity. Example, KSM uniform asset holders (ie. LKSM, KSM) can provide liquidity to the Stable Swap pool and receive tKSM. Liquidity Providers can use tKSM as collateral to mint stablecoins or borrow other assets. The trading fees generated from the Stable Swap pools are collected externally so that LPs can put their synthetic assets to use without compromising trading fees.
Traders
Traders can swap uniform assets at high efficiency and low slippage via the Taiga protocol. When any underlying asset loses its peg, Traders can easily discover and capture arbitrage opportunities, which also helps maintain the value of the synthetic asset. Example: LKSM is trading at an unusually large discount relative to KSM. Traders are motivated to arbitrage this opportunity, bringing the discount between LKSM and KSM back to a normal range. During this process, the value of taiKSM remains stable.
Project Teams
Project Teams can bootstrap liquidity by renting from the common synthetic pool (ie. tDOT). Example: A new project team is bootstrapping an ABC-DOT LP pool on Karura DEX. The project team can contribute single-side liquidity (ie. ABC token) to Taiga protocol in order to earn TAI tokens. The project team can stake TAI for voting rights to direct liquidity from the common synthetic pool to pair with the single-side liquidity to form ABC-tDOT LP pool. This is a cost-effective way for any Project Teams with limited capital to bootstrap an LP pool with deep liquidity on a DEX.