Why are top VCs scrambling to invest? What is USD?
According to Coingecko data, the global stablecoin market capitalization has surpassed $285 billion. Giants like Circle and Kraken are also stepping into the stablecoin payment chain arena.
However, currently, the vast majority of stablecoin projects still primarily anchor to traditional models such as the U.S. dollar or U.S. Treasury bonds, showing a slight lack of overall innovation and commonly 'lacking imagination.' Against this backdrop, a unique challenger is entering the market with a fresh approach.
Recently, a unique stablecoin project USD.AI, which integrates DePIN, RWA, and AI, has sparked heated market discussion. It is not just simply anchored to the U.S. dollar, but generates returns through collateralizing AI hardware, filling the financing gap for computational resources.
And just this morning, USD.AI officially launched and opened the deposit channel, with enthusiasm rapidly rising. This could bring new opportunities for the integration of AI and stablecoins.
Project Background
According to Rootdata, the project was established in 2024. Among the project team, one of the core founders of USD.AI, David Choi, is the co-founder and CEO of the well-known NFT lending platform MetaStreer, and was previously an investment banking analyst at Deutsche Bank.
What truly brings USD.AI into the spotlight is its remarkable financing background.
On the 14th of this month, USD.AI announced the completion of $13.4 million in Series A financing, led by Framework Ventures.
As an investment institution focused on DeFi and infrastructure, Framework Ventures has supported star projects like Uniswap and ChainLink. Its participation in leading USD.AI also reflects institutional recognition of the project's innovative value. Other investors are equally strong, including well-known crypto VC Dragonfly, Layer 2 network giant Arbitrum, and the recently IPO-listed popular exchange Bullish.
The luxurious lineup for this round of financing not only injects strong resources into USD.AI but also validates the appeal of the stablecoin project combining DePIN with AI to top-tier capital, significantly raising market expectations. After the financing information was released, the USD.AI project party seized the opportunity and officially launched on the 19th, sparking widespread discussion in the market.
Operating Principles and Core Mechanisms
Against the backdrop of growing demand for AI computing power, the design of USD.AI combines the stablecoin protocol with AI infrastructure financing to address issues that other projects in the market have not tackled.
Small and medium-sized AI companies possess valuable GPU hardware but struggle to obtain operating funds through traditional channels.
The core goal of the project is to use on-chain capital to support AI companies' hardware procurement and operations, filling the financing gap of traditional finance in the new AI economy while maintaining the low-risk characteristics of stablecoins.
USD.AI revolves around a closed-loop system of 'Collateral - Minting - Investment - Returns,' combining the currently popular RWA and AI concepts, showcasing its unique innovative advantages in this wave of stablecoin trends.
The operating principle of USD.AI begins with users using stablecoins like USDT or USDC as collateral to mint USDai stablecoins at a 1:1 ratio. USDai is supported by U.S. Treasury bonds and mainstream stablecoins to anchor the price to the U.S. dollar while maintaining instant redemption capability and certain liquidity, making it suitable for trading or providing liquidity in the DeFi ecosystem. At the same time, users can further choose to stake USDai to obtain sUSDai tokens and participate in other DeFi projects to gain additional returns, achieving a 'one fish, multiple eats' effect.
USD.AI will use user deposits for two types of asset investments: first, providing loans to AI companies for the procurement of GPUs and other hardware, generating high interest, with the official website currently showing an annual yield of 6.96%; second, if the funds are idle, they will be invested in U.S. Treasury bonds to provide stable base returns. sUSDai holders can amplify their returns through DeFi protocols, with the project’s official website giving a target annual yield of 15%-25%, while USDai holders enjoy low-risk stable returns.
The core mechanism of USD.AI includes several key components to ensure its innovativeness and stability.
1. Dual Token System: USDai serves as a low-risk stablecoin suitable for users seeking stability; sUSDai targets investors looking for high returns, offering flexibility and risk exposure. This design meets the needs of users with different risk preferences while maintaining compatibility with the DeFi ecosystem.
2. Asset Tokenization and Caliber Framework: Through the CALIBER framework, USD.AI will tokenize physical assets such as AI hardware into on-chain assets, ensuring transparency of asset ownership and legal enforceability through legal and technical means. The on-chain insurance mechanism further reduces default risk.
3. QEV Redemption Mechanism: To address the long-term and low liquidity of AI infrastructure assets, USD.AI has designed the QEV mechanism to manage sUSDai redemption requests through a market-driven approach, avoiding the inefficiency of first-come-first-served while ensuring the fairness and stability of the protocol.
4. FiLo Curator Expansion Mechanism: This mechanism allows the protocol to massively introduce new borrowers, expanding the AI infrastructure investment portfolio, while protecting user interests through structural safeguards and risk alignment mechanisms, ensuring diversity and sustainability of income sources.
In summary, the funds deposited by users into USD.AI will be used to loan to AI companies needing GPU and other hardware equipment to earn interest, with full transparency and traceability. If funds are idle, they will be used to purchase U.S. Treasury bonds to obtain guaranteed returns.
USD.AI's innovative mechanism gives it a unique competitive advantage. Compared to traditional stablecoin projects, USD.AI achieves higher returns through AI infrastructure investment; compared to high-risk DeFi protocols, its risk isolation and insurance mechanisms significantly reduce systemic risk.
USD.AI not only injects new vitality into the stablecoin market but also provides a scalable solution for the capital needs of the AI economy, potentially becoming a pioneering project in the fusion of stablecoins and AI infrastructure.
Participation Methods
Currently, the USD.AI project has opened up user deposits and invites other users to obtain the USD.AI rewards system Allo points.
Users can obtain final token rewards through ICO and airdrop methods. All participants will enter with a project valuation of $30 million in circulation (corresponding to 10% of a total FDV of $300 million).
According to official tweets, minting or staking USDai will continuously generate points every day in the future, and users can choose different strategies to determine their final ICO quota or airdrop rewards.
The Allo points activity will end when the YPO (cumulative paid earnings) reaches $20 million. Users opting for the ICO quota need to go through KYC, while those choosing airdrops do not need to undergo KYC.
More advanced ways to acquire Allo points can be understood through the introduction video in the official tweet.
In simple terms, to participate in the project's ICO, holding USDai is sufficient; if you want to participate in the airdrop, you need to stake USDai to obtain sUSDai.
Currently, purchasing USDai or sUSDai will grant qUSDai, which serves as a deposit queue proof and will automatically convert to the corresponding token within 24 hours.
USD.AI currently has a total deposit cap of $100 million. Since all purchased funds are in qUSDai status, the current TVL only shows $52 million deposited during the internal testing period.
Market Discussion
Currently, the market's view of the USD.AI project is polarized.
Supported users generally believe USD.AI is a uniquely innovative stablecoin project that combines the currently popular AI concept, allowing users to enjoy AI dividends while ensuring stable returns. Various participation strategies are provided so that different types of users can find suitable solutions, combining the 'stability' characteristic of stablecoins with options for high risk and high return.
On the other hand, users holding opposing views believe that the information currently revealed about USD.AI shows that its team background may be primarily composed of Chinese individuals, and that the project simply piles up popular concepts without substantial innovation.
Interestingly, USD.AI's core founder David just responded to this FUD tweet, identifying himself as a Korean American and stating that the project is headquartered in New York, but he is very willing to answer questions for Chinese users.
The author believes that USD.AI has indeed provided a different answer in the popular stablecoin arena, but whether it can gain market favor and recognition will depend on whether people are willing to 'vote with their feet' to quickly fill the $100 million TVL cap.
Its success or failure will also become a touchstone for measuring the market's acceptance of the emerging narrative of 'AI infrastructure + stablecoin'.
This article is cooperatively reprinted from: Deep Tide
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