After Plasma and Falcon, will USD.AI become the next generation of divine mining?

Author: Azuma, Odaily Daily Report

After Plasma and Falcon's consecutive TGE in a short time, with opening FDVs of over 10 billion USD and several billion USD respectively, funds have begun to search for the next potential high-yield "gold mine." With eye-catching labels such as "AI + stablecoin," "YZi Labs investment," "Plasma partners," and "500 million quota hard to come by," USD.AI has become the top choice for many users.

The combination of AI and stablecoins

USD.AI is positioned as a synthetic dollar stablecoin protocol aimed at providing funding for the physical infrastructure of artificial intelligence and other emerging fields.

On August 14, USD.AI announced the completion of a $13 million Series A funding round, led by Framework Ventures, with participation from Bullish, Dragonfly, Arbitrum, and others. Subsequently, on August 26, YZi Labs announced an investment in USD.AI, with the specific amount not disclosed. Then, on August 28, USD.AI announced a partnership with Plasma, becoming one of the initial deployments on the day of Plasma's mainnet launch.

According to USD.AI, the main channels in the emerging artificial intelligence industry are still dominated by traditional financial yield products, such as loans, bonds, and convertible preferred stocks. However, there is a significant gap between this financing form and market demand. Therefore, the protocol aims to construct a financial layer tailored around the AI cycle to bridge this demand gap.

Specifically, USD.AI allows entities with financing needs to use the hardware itself as collateral for loans, restructuring the associated risks into standardized investable targets, and earning returns from it — in simple terms, it will accept AI companies using graphics processing unit (GPU) hardware as collateral, and issue loans to them, then distribute the loan returns to deposit pledge users.

The operation of the USD.AI protocol relies on three roles: first, Depositors, who can obtain the stablecoin USDai through deposits and then stake it as sUSDai to earn protocol yields; second, Borrowers, typically small and medium-sized AI companies that cannot meet their loan needs through traditional financing channels; and third, Curators, a relatively special role primarily responsible for providing first-loss capital, earning the corresponding premium, and achieving risk isolation between capital and operational entities through tokenization.

As mentioned above, USD.AI currently offers two forms of stablecoin products: one is the fully collateralized stablecoin USDai, which is pegged to the US dollar (currently trading at a premium), and this stablecoin supports redemption at any time; the second is the staked version of the stablecoin sUSDai, which shares protocol revenue (currently with a staking yield of 13.22%). The price of sUSDai will gradually increase with the accumulation of yields, and there is a 30-day time limit for unstaking.

Points Program —— IC0 or Airdrop

USD.AI launched its points program (Allo™) at the very beginning, clearly stating that the points would correspond to future ICO (FDV valuation of 300 million USD) or airdrop rights. The potential value expectation is also the main reason why this protocol attracts users at present.

However, it should be clarified that the rights corresponding to the points of USD.AI can only be chosen between IC0 or airdrop — if you choose to use USDai to obtain points, it corresponds to IC0 rights (a total allocation of 70% tokens), which requires KYC and investment subscription; if you choose to use sUSDai to obtain points, it corresponds to airdrop rights (a total allocation of 30% tokens), which does not require KYC or investment quota.

USD.AI has made it clear that a single address cannot receive both IC0 and airdrop shares simultaneously. The user's total allocation will be assigned to either IC0 or airdrop based on their final contribution points. If you want to obtain both, you must use two separate wallets to participate in the points activity.

As shown in the figure below, users can obtain points through USDai and sUSDai (including corresponding yield rates and point multipliers) as illustrated in the figure, where the left side USDai corresponds to IC0 rights, and the right side sUSDai corresponds to airdrop rights.

It is not difficult to find that whether it is USDai or sUSDai, currently doing LP in Pendle or buying YT is the way to get the highest points multiplier (note that only the SY part of LP counts towards points), and doing LP also offers considerable annualized returns (42.21%, 36.59%)—however, you must not rush in blindly right now, as the minting limit for USD.AI has been reached, and you can only acquire USDai by buying at a premium from the secondary market (around 1.03 dollars). The temporary entry cost is too high, so it might be better to wait for the next increase in the minting limit.

Is ### really worth mining?

As the popularity of USD.AI continues to rise, some FUD voices have emerged around the protocol, and the market's view on the protocol seems to show a noticeable split.

The optimistic side believes that USD.AI combines two hot narratives: "stablecoin" and "AI". Even without considering the fundamentals, it is an excellent target for speculation. Additionally, USD.AI's lead investor Framework has performed exceptionally well recently (they are also the lead investor for Plasma), and the expectations brought by YZi Labs for its listing on Binance further elevate the imaginative ceiling for USD.AI. Moreover, the previous instances of USD.AI quickly being snapped up after increasing the deposit limit are hard not to associate with Plasma.

However, the pessimistic side believes that the lending model introduced by USD.AI has not been fully validated by the market. With AI companies that are unable to obtain sufficient financing through traditional channels as the main borrowers, this is actually a debuff. Whether this mechanism can be effective and sustainable in the long term remains unknown; in addition, KOL "加密无畏 (@cryptobraveHQ)" also exposed that the team of USD.AI is suspected to be the original team of the previously rug-pulled NFT project MetaStreet, which may have a dark history...

In terms of personal operations, I deposited some funds into the Pendle USDai LP after USD.AI went live in late August, but the position was limited to a smaller percentage. I am considering buying some sUSDai YT with a different account when the price drops a bit further.

For users who are still interested in participating in USD.AI, I personally recommend operating around Pendle as much as possible within a bearable risk range (even if it’s just for the base yield of the LP itself, the APY is quite ideal). However, I do not recommend entering at a premium right now—unless you believe that the returns during this period before the next open quota can cover nearly 3% of the wear and tear. As for whether to choose USDai to participate in the ICO or to choose sUSDai to get airdrops, that’s a matter of personal preference.