Qi Dao | Mai.Finance

Summary

The goal of this QIP is to onboard a peg stability module (PSM) vault to mint MAI, in order to improve the stability of MAI’s peg as well as increase confidence in MAI farmers.

Abstract

This PSM would allow users to deposit approved tokens to mint MAI. The tokens stored in the PSM will earn yield for the protocol. This yield will offset the cost of capital associated with MAI tokens minted through this method, as well as generate a new revenue stream for the protocol. The first PSM would be on Base, with cUSDC via Beefy Finance as the first approved strategy. cUSDC earns interest and liquidity mining rewards from Compound Finance. PSMs may be added to other chains only once bad debt from Fantom is cleared from those chains.

Motivation

Confidence in MAI

Bad debt from Fantom operations as well as the resulting depeg of MAI has affected confidence in yield farmers. This can be seen in the high market equilibrium APRs on MAI LPs. This presents a challenge to QiDao’s unit economics. The higher the yield that the market demands, the more QiDao needs to charge on loans to remain profitable.

Return on minted MAI

QiDao earns less than 3% effective APR on all of its loans. This is less than the risk free rate that can be earned by DAI’s saving rate or directly via RWAs.

Core principles

It is imperative that MAI be stable and that markets have confidence in holding MAI. That is central to any stablecoin design, as it reduces the risk premium demanded by parties to participate in the stablecoin system. Additionally, QiDao needs to aim at having profitable unit economics. While profitability does not need to come in the short term if the protocol is implementing growth strategies, it does eventually need to be attained.

Specification

Rationale

Raising confidence in holding MAI

By adding a PSM to QiDao, MAI holders will have the option to redeem their MAI tokens for other established stablecoins. This redemption option will allow stablecoin farmers the ability to access MAI yield without having full exposure to MAI’s peg, thereby raising confidence in MAI yield opportunities.

Increasing the protocol’s return on minted MAI

Every MAI minted via this PSM could earn the protocol at least 5% APR via known yield sources such as the DAI savings rate or lending markets such as Aave and Compound. This rate is much higher than what QiDao is currently earning in any of its loans. Adding a PSM will set a floor for loans at 5%, given the opportunity cost to the DAO.

Technical Specification

PSM specifications

• The ability for users to deposit whitelisted tokens and receive MAI in return.
• A fee setter for deposit fees and withdraw fees
• Limit the deposit of collateral to whitelisted strategies, which require Guardian signatures for implementation and QIP votes for approval
• The ability to retain accrued interest earned by the protocol
• Withdraw functions for retained interest to be collected by treasury
• Epoch-styled withdrawals

Quorum Standards

The option with the most votes will be adopted.

Options

• Approve proposal
• Further discussions needed
• Abstain