Cork Protocol Incentive Proposal

Incentives
1

Protocol/Gauge Name:

Provide the full name of your protocol or project e.g.: Uniswap V3 - pufETH/stETH

  • Cork V1 - pufETH pairs

Protocol Description:

This will appear in the metadata of the gauge listing (Max 500 Characters)

  • Cork is a tokenized risk protocol that enables users to price, hedge, and trade risk in DeFi. It provides a market-driven solution for managing depeg risks in stablecoins, liquid staking tokens, and other pegged assets. By introducing the "Depeg Swap" token, Cork allows DeFi users to mitigate losses from depeg events while unlocking new yield opportunities for investors.

Protocol Overview:

A brief overview of your protocol, including it’s core functionality and target audience

Cork Protocol is a decentralized finance (DeFi) platform designed to manage and mitigate the risks associated with pegged assets, such as stablecoins and liquid staking tokens (LSTs). It introduces the Depeg Swap token, a novel financial instrument that allows users to hedge, trade, and earn by tokenizing the risk of these assets losing their peg.

Core Functionality:

  • Depeg Swaps: These instruments enable users to hedge against the risk of pegged assets deviating from their intended value. By acquiring Depeg Swap tokens, users can protect their holdings from potential devaluation due to depegging events (before the token expiration date).

  • Risk Pricing through Cover Tokens: Cork Protocol facilitates competitive market pricing for the risk associated with pegged assets. The Cover Token mechanism enhances liquidity and stability within the DeFi ecosystem by providing transparent management tools to transfer and offload depeg risk. Cover Tokens can be bought at a discount from the market and redeemed for underlying assets on the maturity / expiration date.

  • Trustless and Permissionless: The protocol is designed to be trustless, allowing users to instantly buy and sell protective tokens (Cork Depeg Swaps) without the need for trusted intermediaries. The availability of both Permissioned and Permisionless markets promotes broader adoption and accessibility within the DeFi community.

By offering these functionalities, Cork Protocol aims to contribute to a more stable, efficient, and mature DeFi ecosystem, bringing transparent risk pricing and active risk management to onchain finance.

Target Audience:

  • DeFi Participants: Users engaged in decentralized finance activities who seek to hedge against the risks associated with pegged assets can utilize Cork Protocol’s Depeg Swap tokens to manage potential depegging events.

  • Institutional Investors: Entities holding significant positions in stablecoins or LSTs can leverage Cork Protocol’s Depeg Swap tokens to mitigate exposure to depegging risks, thereby enhancing portfolio stability.

  • Liquidity Providers: Individuals or institutions providing liquidity in DeFi markets can benefit from Cork Protocol by earning fees through Cork Liquidity Vaults.

  • Other Protocols: Other onchain protocols with hard assets can benefit from integrating Cork Protocol by earning premiums through the minting of Depeg Swaps (using the Cork Peg Stability Module).

Key Features:

Please bullet point main features, any technical capabilities and unique aspects

  • Core to the Cork protocol is the Peg Stability Module and its Depeg Swap token, a novel asset that prices the risk of a depeg event, empowering crypto traders and funds to manage pegged-asset risk.
  • Each Cork market is structured as a token pair consisting of a redemption asset and a pegged asset. ThepufETH in a Cork Market can be designated as either the pegged asset or the redemption asset.
    • When pufETH is assigned as the pegged asset, its value is safeguarded through the liquidity in Cork Protocol.
    • When pufETH is designated as the redemption asset, it serves as the harder asset that can be redeemed when another ETH-pegged asset depegs.
  • Each Cork market operates with fixed-duration terms and is powered by
    • the Peg Stability Module, which mints Depeg Swaps and Cover Tokens with a set time to expiry
    • an Automated Market Maker on Uniswap v4 to determine pricing based on the yield space curve, influenced by supply and demand dynamics
  • Additionally, each market has a Cork Vault, which automates liquidity deployment across consecutive terms, unlocking new yield opportunities for investors through:
    • the Automated Market Maker Trading fees
    • the Peg Stability Module Redemption and Repurchase fees
  • Traders can either:
    • Buy a Depeg Swap to hedge against a depeg, or
    • Buy a Cover Token to earn a fixed yield, provided no depeg occurs or the peg is restored.

Distribution Method:

Please confirm distribution method (Merkl usage or StakerERC20 contract address)

  • Merkl Distribution

Pool Addresses:

Please provide the recipient Pool addresses (chain name: address)

  • Ethereum Mainnet: 0xCCd90F6435dd78C4ECCED1FA4db0D7242548a2a9
  • Ethereum Mainnet: 0x000000000004444c5dc75cB358380D2e3dE08A90
  • Ethereum Mainnet: 0x55B90B37416DC0Bd936045A8110d1aF3B6Bf0fc3

Incentive Impact Statement:

Provide a brief statement on how you believe the token incentives from Season 2 will bolster user adoption for your protocol. Include potential impacts on user growth, engagement, and long-term sustainability.

  • Establishing a deep and liquid Cork market for Puffer’s pufETH Depeg Swap (DS) tokens will enhance risk management and capital efficiency for both ecosystems, attracting new users in several key ways:
    • Stronger pufETH Adoption – By providing a robust market for hedging depeg risks, traders and institutional users will have greater confidence in holding and using pufETH, driving broader adoption within the Puffer ecosystem.
      • When pufETH is assigned as the pegged asset in Cork Protocol, its value is safeguarded through the liquidity in Cork Protocol.
      • Token incentives will encourage more of such protective liquidity in Cork Protocol.
    • Increased Trading & Liquidity – A liquid Cork market for pufETH will create new yield opportunities for liquidity providers and DeFi traders, encouraging active participation from a wider audience.
      • When pufETH is designated as the redemption asset in Cork Protocol, it serves as the harder asset that can be redeemed when another ETH-pegged asset (such as wstETH) depegs.
      • Token incentives will drive more pufETH to be locked in Cork Protocol, enhancing market depth while offering boosted yields—stacked on top of Cork Protocol’s premiums and fee revenues.
    • Cross-Ecosystem Synergies – Users from both Puffer and Cork Protocol will benefit from deeper integration, bringing Puffer’s liquid staking community into Cork’s risk markets while introducing Cork’s traders to pufETH.

Eligibility Verification:

Please provide a link to your protocol, any security audits for protocol deployment, vaults, etc. If you have (or plan to launch) an active deployment of your protocol on Puffer UniFi please provide whether it includes security audit status, open source status.

To fulfill the eligibility criteria all protocols should provide a rationale as to how they add value to the ecosystem. Additionally, if you’re solely an asset provider, provide a verified contract address to your asset on Puffer UniFi

Any Other Resources e.g. direct URL to pool, docs, etc.

Contact Information:

Provide contact details for further discussions, such as an email address, Telegram handle, or Discord username.

Questions for the Puffer Team or Community (Optional):

Please reach out in Discord for specific questions or feedback you’re seeking from the Puffer team or community to help refine your participation in Season 2.

See Telegram Group

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