Invested by YZi Labs, Detailed Explanation of USD.AI Stablecoin's New Play

USD.AI generates returns through AI hardware collateral, filling the financing gap for computing resources. This article will delve into its unique operational principles, core mechanisms, and market prospects. (Background: CZ family office YZi Labs announced support for 10X Capital to establish a BNB reserve company, and is also planning an IPO.) (Additional background: A quick read on YZi Labs' latest investment in Digital Asset: The invisible force behind the $4 trillion RWA empire.) USD.AI generates returns through AI hardware collateral, filling the financing gap for computing resources. On August 26, YZi Labs announced a strategic investment in USD.AI, a stablecoin protocol that provides hardware collateral financing for AI infrastructure. According to Coingecko data, the current global stablecoin market cap has exceeded $285 billion. Major players like Circle and Kraken are also entering the stablecoin payment chain race. However, the vast majority of current stablecoin projects are still primarily anchored to traditional models like the US dollar and US Treasuries, showing a general lack of innovation and imagination. Against this backdrop, a unique challenger is entering the market with a fresh approach. Recently, a distinctive stablecoin project, USD.AI, which integrates DePIN, RWA, and AI, has sparked lively discussions in the market. It is not merely a simple dollar anchor but generates returns through AI hardware collateral, filling the financing gap for computing resources. Recently, USD.AI officially launched and opened its deposit channels, rapidly gaining traction. This could bring new opportunities for the integration of AI and stablecoins. Project Background According to Rootdata, the project was established in 2024. One of the core founders of USD.AI, David Choi, is the co-founder and CEO of the well-known NFT lending platform MetaStreet and was previously an investment banking analyst at Deutsche Bank. What truly brought USD.AI into the spotlight is its remarkable financing background. On the 14th of this month, USD.AI announced the completion of a $13.4 million Series A financing led by Framework Ventures. As an investment institution focused on DeFi and infrastructure, Framework Ventures has supported star projects such as Uniswap and ChainLink. Its participation in leading USD.AI reflects institutional recognition of the project's innovative value. Other investors include notable crypto VC Dragonfly, Layer2 network giant Arbitrum, and the recently IPO'd popular exchange Bullish. The luxurious lineup of this financing not only injects substantial resources into USD.AI but also validates the appeal of DePIN combined with AI in stablecoin projects to top-tier capital, significantly raising the market's expectations for it. After releasing the financing information, USD.AI seized the opportunity and officially launched on the 19th, sparking widespread discussion in the market. Operational Principles and Core Mechanism In the context of growing demand for AI computing power, USD.AI's design combines the stablecoin protocol with financing for AI infrastructure to address a problem that other projects in the current market have not touched upon: 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 support AI companies' hardware procurement and operations through on-chain capital, 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', integrating popular RWA and AI concepts, showcasing its unique innovative advantages in this wave of stablecoin trends. The operational principle of USD.AI begins with users using stablecoins such as USDT or USDC as collateral to mint USDai stablecoins at a 1:1 ratio. USDai is backed by US Treasuries and mainstream stablecoins to achieve dollar price anchoring, with immediate redemption capabilities and certain liquidity, suitable for trading or providing liquidity in the DeFi ecosystem. Users can further choose to stake USDai to obtain sUSDai tokens, participating in other DeFi projects to earn additional returns, achieving the effect of 'multiple bites of the cherry'. USD.AI will use the funds deposited by users for two types of asset investments: first, providing loans to AI companies for purchasing GPU hardware, generating high interest; the current official website shows an annualized return rate of 6.96%; second, if funds are idle, they will be invested in US Treasuries to provide stable baseline returns. sUSDai holders can amplify returns through DeFi protocols, with the target annualized return rate provided on the project's official website reaching 15%-25%, while USDai holders enjoy low-risk stable returns. The core mechanism of USD.AI includes several key components to ensure its innovation and stability: 1. Dual-token system: USDai serves as a low-risk stablecoin suitable for users seeking stability; sUSDai is aimed at investors seeking high returns, offering flexibility and risk exposure. This design meets the needs of users with different risk preferences while maintaining compatibility within the DeFi ecosystem. 2. Asset tokenization and Caliber framework: Through the CALIBER framework, USD.AI tokenizes physical assets such as AI hardware into on-chain assets, ensuring transparent ownership of assets with legal enforceability through legal and technical means. An on-chain insurance mechanism further reduces default risks. 3. QEV redemption mechanism: To address the long-term and low liquidity nature of AI infrastructure assets, USD.AI has designed a QEV mechanism that manages sUSDai redemption requests in a market-driven manner, avoiding the inefficiency of first-come-first-served while ensuring the fairness and stability of the protocol. 4. FiLo Curator expansion suite mechanism: This mechanism allows the protocol to scale by introducing new borrowers on a large scale, expanding the suite of AI infrastructure investment portfolios while maintaining user interests through structured protection and risk alignment mechanisms, ensuring diversity and sustainability of return sources. In summary, the funds users deposit into USD.AI will be loaned to AI companies needing GPU hardware computing power to earn interest, with full transparency. If funds are idle, they will be used to purchase US Treasuries for guaranteed returns. The innovative mechanism of USD.AI gives it a unique competitive advantage, achieving higher returns through AI infrastructure investment compared to traditional stablecoin projects, and significantly reducing systemic risks compared to high-risk DeFi protocols through its risk isolation and insurance mechanisms. USD.AI not only injects new vitality into the stablecoin market but also provides scalable solutions for the capital demands of the AI economy, expected to become a pioneering project for the integration of stablecoins and AI infrastructure.