QiDao Protocol is a collateralized debt positions (CDPs) protocol that enables users to mint MAI stablecoins pegged to the U.S. Dollar without incurring any interest. The platform offers services such as 0% interest vaults, variable-rate lending markets, and interest-bearing collaterals. QiDao is the first Polygon-based stablecoin protocol. ^[1][2][3]

Overview

QiDao is a decentralized and community-governed overcollateralized stablecoin protocol designed to provide native stablecoin minting capabilities for multiple blockchain networks. The protocol is self-sustaining, with loans being secured by maintaining a collateralization ratio greater than the amount of debt issued. Loans are disbursed and repaid in MAI, a stablecoin that is softly pegged to the US dollar. QiDao comprises several components, which include: ^[4]

• Overcollateralized vaults: MAI relies on collateral vaults to back its value. At all times, MAI stablecoins are fully backed by collateral.
• Vault: Where users deposit their token collateral and borrow MAI. Vaults are user managed and controlled.
• Decentralized and user-managed: MAI is built on market incentives and penalties. There is no centralized authority or algorithm controlling the protocol. Only users can control their funds.
• Two tokens: MAI is the stablecoin made by the QiDao Protocol and Qi is the protocol’s governance token.

Governance

Community members can vote on QiDao Improvement Proposals, with the weight of each user's vote dependent on their Qi Powah. The voting process is as follows: ^[5]

1. Soft proposal to the community on Discord
2. Community Townhall held for Critical Votes
3. QIP launched on SnapshotQIP launched on Snapshot
4. QIP results are announced and implementation starts

MAI Token

MAI is a decentralized stablecoin that is collateralized by locked collateral tokens, providing users with control over their funds. The borrowing process is non-custodial, meaning that users retain full control of their assets throughout the borrowing process. ^[6]

The collateral tokens can be either static tokens such as LINK and CRV, or alternative assets such as Beefy and Yearn strategies. The collateralization ensures that the value of MAI remains stable and pegged to the US Dollar. The protocol enables non-custodial and decentralized borrowing of MAI, providing users with complete control over their funds. Users can use interest-bearing collateral such as Beefy, Yearn, and Aave receipt tokens to earn yield while their collateral is deposited in MAI vaults. This feature allows users to accumulate interest on their assets while they are used as collateral for borrowing. ^[6]

Qi Token

Qi Token is the protocol’s government token. Qi tokens have a maximum supply of 200 million. The token's distribution is divided between strategic partners, the keeper allocation, and the community. Strategic partners receive less than 5% of the tokens, which are released linearly over a period of 18 months. The keeper allocation constitutes approximately 10% of the total token supply, which will be vested over a period of three years. The remaining 85% of tokens are reserved for community distribution. ^[7]

QiDao V2

QiDao V2 includes a new liquidation engine that helps to mitigate the risk of default, as well as improved risk management tools that enable users to assess and manage their exposure to risk. Another update is the implementation of a new liquidation engine, which enables dynamic liquidations in response to a vault's collateralization. ^[8]

The protocol also includes improvements to risk management processes, including a new process for approving and monitoring new vault types. Other features include tools for the DAO to deprecate vault types and a partnership with Manhattan Finance to open MAI minting to various providers. ^[8]

To address community demands, QiDao V2 introduced caps on the debt size of individual vaults to prevent excessively large vaults and a new contributor position to create and maintain liquidity monitoring reports for all collaterals and chains on QiDao. Finally, all new vault and oracle code require approval from the DAO before launching, providing greater transparency and insight into new deployments. ^[8]