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Last updated: Aug 16, 2023
QiDao is a cross-chain stablecoin (MAI) protocol launched in April 2021. It is fully decentralized and community-driven. QiDao's main goal is to provide an easy-to-use DeFi protocol that lowers the threshold for participating in decentralized finance and allows using tokens as collateral to issue MAI tokens. The stablecoins are secured by the fact that the value of the collateral assets always has more value than the amount of debt allocated. Credits are paid and repaid in MAI (a soft stablecoin peg to the U.S. dollar).
The protocol is handled by the Mai Finance app, which is a frontend/dashboard for the QiDao protocol, allowing users to connect to the QiDao protocol via a website, create vaults and borrow stablecoins.
QiDao is decentralized and user-controlled: MAI is built on market incentives and penalties. There is no centralized authority or algorithm controlling the protocol. Only users can control their funds.
The main components of QiDao include collateralized and overcollateralized vaults. MAI relies on collateralized vaults to maintain its value. At all times, MAI's stablecoins are fully collateralized. Vaults enable users to deposit collateral for their tokens and borrow MAI. Vaults are managed and controlled by users. At the core of the project, there are two tokens: MAI - a stablecoin created as part of the QiDao protocol, and Qi - the protocol’s governance token.
The main feature of QiDao is its MAI (earlier miMATIC) stablecoin. MAI is created when users deposit tokens as collateral in vaults, in turn receiving credit against that collateral. The collateral can be in the form of tokens such as wrapped BTC, ETH, LINK, CRV, and others. It can also be exotic assets like Beefy and Yearn strategies. The loan is interest-free, which allows long-term ownership of MAI without accumulating interest. However, there is a 0.5% QiDao fee for repayment of each MAI debt. Users can also mint MAI through Anchor, where MAI is minted in exchange for other stablecoins (USDT, DAI, or USDC).
MAI is softly pegged to the U.S. dollar, meaning that 1 MAI is equal to about $1. The fee for using Anchor is 1% per coinage. The Treasury will mint new MAIs and hold the deposited stablecoins as collateral. This allows for arbitrage and keeps the anchor between 0.99% and 1.01%. Anchor ensures that there is always MAI-Stable liquidity at a price that is close to the peg. This allows users to be able to repay their loans at close to $1 even if the price of MAI deviates from the peg on other exchanges. The vault and treasury (via Anchor) burn MAI when users repay their debts. The collateral to debt ratio is 110-150% (depending on the asset) or higher to avoid liquidation.
As a cross-chain protocol, QiDao works on popular EVM-compatible blockchains. Therefore, to interact with the Mai Finance app, the front end of QiDao, users must have a wallet supporting the ERC-20 token standard.
The backbone of Mai Finance are vaults — these are special vaults where the user can put their assets and mint MAI. The maximum amount of MAI that can be minted on a particular vault depends on how many assets are placed on that vault. A debt ceiling is introduced to make sure that the market will not be flooded with MAIs in a concise time, which could affect the price of a stablecoin.
A minimum CDR (Collateral to Debt Ratio) is adopted for each type of vault, a threshold below which a vault is considered at risk because the amount borrowed may not be backed by sufficient collateral. The CDR represents the ratio between the value of the deposited assets in a user’s vault compared to the amount of MAI they borrowed. Maintaining a CDR above 100% means that, at any point, there is more collateral than debt. This is mandatory to ensure that the MAI stablecoin is over-collateralized, and it is one of the foundations of Mai Finance.
It's very important to keep an eye on the CDR and maintain a healthy ratio to prevent liquidation and increase the healthy operation of the whole Mai Finance platform by ensuring the MAI volume in circulation is properly backed up. The "healthy" CDR, as defined by the Mai Finance team, is between 25% and 270% above the minimum CDR value.
Mai Finance does not charge interest on loans, which means there is no increasing amount of money the user has to pay back. Instead, users pay back what they borrowed plus a 0.5% repayment fee.
QI token staking is done on the Mai Finance platform through the "Boost" tab. When users stake tokens, they receive eQI tokens in return, which confirm their right to a portion of the pool’s tokens.
QI holders lock their QI for two reasons: to increase their QI Powah (voting rights) and to get a larger share of the protocol’s revenue. QI Powah is a measure of how much QI someone has. The longer users lock QI, the larger the increase in their shares.
The following terms are available for staking: one month, three months, six months, one year, and four years. Revenues are collected weekly and distributed on the following Wednesday. Weekly QI staking rewards include 30% of the repayment fees for all collateral types, plus a 25% weekly boost (converted into QI). Rewards also include 100% of the farming rewards from the deposit fee revenue used to farm QI-MATIC.
The native token of the QiDao protocol is the ERC-20 governance token QI. It is used for governance, staking, and it is also distributed to users as a reward for farming. The total supply of tokens is limited to 200 million. The distribution of tokens is as follows: strategic partners <5%; Keepers (the role of Keepers is to provide direction to the network in its early stages and to maintain and upgrade the codebase following governance votes) 10%; community 85%. The community can vote through the DAO on how to use the tokens.
The QiDao team is anonymous.
QiDao has partnerships with some of the largest cryptocurrency ecosystem projects. Among them are Beefy Finance, Curve, Balancer, QuickSwap, AAVE, SpiritSwap bringing more liquidity to Mai Finance platform. QiDao has also partnered with Chainlink, to get up-to-date asset quotes. To introduce the ability to transfer assets between networks and to the platform, Multichain's decentralized bridge solution was built into Mai Finance. Other QiDao partners include Mt Pelerin, Insureace, Beethoven-X and Stake DAO.
The project has no public roadmap.
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