Currently, the rapid development of AI has created immense demand for computing resources and related infrastructure. However, traditional financing models have many drawbacks: they are slow, opaque, geographically restricted, and lack scalability.

The birth of USD.AI targets the financing pain points of AI hardware and DePIN. Projects such as GPU computing clusters and new IoT networks often have huge capital expenditures but find it difficult to obtain loans from traditional banks (even if they have stable cash flows). At the same time, a large amount of DeFi funds lack reliable high-yield destinations.

USD.AI connects the two: through a protocol pool, users' stablecoins are lent to strictly selected AI infrastructure operators, secured by their expensive hardware. This way, these operators obtain much-needed expansion funds to purchase more equipment and expand computing power, while contributing crypto users earn high lending interest returns, achieving a win-win situation.

⭐️ 1. Core Mechanism

USD.AI adopts a dual-token model, issuing two stablecoin assets: USDai and sUSDai, allowing users to deposit stablecoins to mint USDai; pledging USDai can earn sUSDai.

- USDai is a low-risk synthetic dollar, backed by interest-bearing government bonds (like the 'M' token of M^0) as collateral, but the income generated from the underlying government bonds will not be distributed to USDai holders. It provides stability and liquidity and can be redeemed at any time.

- sUSDai is an 'income version' token aimed at investors, with funds directed towards loans for AI computing power, energy, communication, and other infrastructure to obtain income from these physical assets. Thus, the income sources of sUSDai come from two parts: one is the income generated from the underlying government bonds of USDai, and the other is the interest from loans for physical infrastructure such as AI hardware and DePIN assets.

Note that sUSDai has a 30-day redemption window. If you do not want to wait for 30 days and want to gain priority redemption rights in advance, you can participate in the QEV auction mechanism to bid. (A detailed introduction to QEV will be presented in the next section)

In summary, USD.AI aims to convert AI hardware, computing devices, and DePIN assets, which originally lack liquidity, into efficient and liquid productive capital through the dual-token USDai/sUSDai system.

⭐️ 2. Technical Interpretation

In terms of technical mechanism design, USD.AI has introduced the CALIBER asset framework and the QEV redemption mechanism to provide a safety net and liquidity guarantee for the aforementioned model.

The CALIBER framework is a set of solutions for digitizing and legally custodizing physical assets. When borrowers use AI hardware as collateral, USD.AI will mint on-chain NFT ownership certificates representing that asset. In this way, if the borrower defaults, the agreement can legally reclaim and dispose of the equipment to repay investors. For users, CALIBER means that the assets behind sUSDai are real and secured hardware, enhancing the credibility of the entire system.

The QEV mechanism is used to manage the redemption liquidity of sUSDai. Unlike the first-come-first-served queue of general stablecoins, USD.AI has designed the redemption to be a blind auction held once a month, where the protocol packages the funds available for redemption in the current period, allowing holders who wish to exit to anonymously bid for redemption. The higher the bid (the less interest they are willing to give up), the priority they have in exchanging, effectively using market means to determine who exits first. This auction mechanism prevents panic withdrawals and incentivizes long-term holding.

⭐️ 3. Participation Methods

Currently, USD.AI is in its internal testing phase, and participants can mint USDai and sUSDai on Arbitrum. As it is still a closed test, the official application interface is not yet open to the public, and ordinary users need to fill out a whitelist on the official website to strive for participation eligibility.

According to the roadmap, the project plans to open public testing soon, launch on the Ethereum mainnet, Berachain, and more chains, and is about to introduce a point reward mechanism called Cores—early testers and contributors will earn points based on their activities for future rewards.

⭐️ 4. Risk Warning

Liquidity lag risk: Due to the closed-cycle redemption design of sUSDai, normally, redemption requires waiting for a cycle (about 30 days) to withdraw the underlying assets. If there is a concentrated redemption demand in a short period, the liquidity of users' funds will be limited. To address this, the project has introduced the QEV auction mechanism to buffer, but secondary market liquidity may still experience temporary shortages in extreme cases, requiring some liquidity expectation management.

Early protocol risk: USD.AI is still in the early testing phase, and its smart contracts, auction mechanisms, etc., may have undisclosed issues that need to be verified over time. Before participating, one needs to prepare mentally and assess risks for possible extreme situations.

⭐️ 5. Future Outlook

With the explosive growth in demand for artificial intelligence infrastructure, the model of USD.AI is functioning well. This not only means that DeFi funds can flow in on a large scale to support the construction of AI networks but also indicates that USD.AI may become an indispensable part of the AI infrastructure era.

Of course, the development of the project still needs to be tested over time, and we can keep an eye on it. If you have any thoughts about USD.AI or AI stablecoins, feel free to leave comments! 👏