AMA Recap: QiDao
Here is the transcript of Adamant’s first AMA featuring QiDao!
Pedro (Adamant): This is Adamant’s very first AMA session and we’re happy to have a blue-blood Polygon community with us to get us going. Perhaps you can start with a very quick TL;DR of what QiDao is for the (likely few) of us who are a bit unfamiliar with the protocol?
Benjamin (QiDao): Sure, QiDao is a way for users to use the value of their tokens without having to spend them. The way it works is you lock your tokens in vaults and then borrow stablecoins against the value of your tokens at 0% interest. You can then spend those stablecoins on anything: rent, levering your position, farming, or diversifying your portfolio.
Pedro (Adamant): There are several stable coin options available; it is hard to pick which on to use. They all seem to do the same thing. What should one consider when picking a stable coin to use?
Benjamin (QiDao): I think it’s important to first consider what you’re trying to get from a stablecoin. In the case of QiDao, what we offer is that lending case for users that are bullish on tokens but want to still use the value of those tokens. In terms of deciding what CDP stablecoin, I would look at safety as well as availability of the collateral I’m bullish on. For example: if a stablecoin doesn’t accept LINK and you’re very bullish on LINK, then that really becomes a roadblock to using them. On the safety part, I would analyze how prepared a protocol is for the worst case scenario.
Pedro (Adamant): What makes MAI different from[other stablecoins]? And how Qi would support miMatic in the near future, boosts, utility, etc?
Benjamin (QiDao): What separates from most stablecoin protocols that have come and gone in the Polygon space is that we’re not algorithmic. Our stablecoin is backed by organic and user-focused incentives and penalties.
What stands out about QiDao within collateralized stablecoins is the variety of token collateral as well as the conservative risk management of the protocol. We offer more variety in collateral than any stablecoin on Polygon. The top priority is keeping the peg and having MAI always backed by token collateral. That’s why we only use Chainlink oracles for our collateral. This ensures that the liquidation process runs smoothly.
I would also mentioned our strong partnerships in the space. For example, we are Polygon’s official stablecoin for bounties and hackathons on Polygon… I think a lot of the success of Polygon has come from the support their team gives to projects.
Pedro (Adamant): What mechanisms exist to insure that MAI can stay at the $1 peg? The Anchor 1% static fee insures it doesn’t fall below $0.99 as long as there is USDC in the swap.
Seeing the trend over the last couple of weeks (MAI consistently below $1), how can we make sure the $62M of USDC doesn’t get drained slowly over time?
Benjamin (QiDao): Anchor is an important aspect of our peg mechanism. Even with the amount of USDC lowering recently, we still have enough USDC to correct the peg. The protocol has also made good revenue on the arbitrage fees.
In terms of the amount of USDC lowering — moving away from USDC collateral isn’t a bad thing. We saw last week that USDC collateral fell, yet overall MAI increased. This means that people are moving towards using vaults rather than just Anchor.
I would also add that we’re going to accept a small amount of DAI and USDT in Anchor (following a community proposal passing the move). This should help maintain Anchor’s strength.
Pedro (Adamant): Right now, miMatic uses liquid collateral to peg, and then uses the anchor to hold a peg to the USD. To hold a stable price over a longer period could you see a future where the vault is backed non-liquid assets, thinking veCRV or other locked token receipts? If not, why not? If so, how do you envision the tokenomics to change?
Benjamin (QiDao): I don’t see us accepting illiquid assets. The problem with illiquid assets is that they can’t be liquidated. What keeps the peg is that all undercollateralized vaults can be liquidated by users.
We could definitely take locked token receipts that can be easily redeemed. We currently accept Aave market tokens, for example. Future options could be dQUICK and LPs.
Pedro (Adamant): Is there any plans on adding LP tokens as collateral in the future? That way it is possible to farm with the LP tokens while it is being used as a collateral for extra safety and revenue.
Benjamin (QiDao): I’m very excited to have LP tokens as collateral. The capital efficiency would be great. You could compound the rewards from LP tokens and borrow against their growing value at 0% interest. that’s definitely in our roadmap. Should be coming after vault incentives are live (assuming the community approves).
Pedro (Adamant): QiDao recently reduced collateral factor to 120%; in case something like May 19 occurs again, what mechanism would guarantee the safety of the protocol?
Benjamin (QiDao): We actually reduced the liquidation ratios to 130–135%. We’ve seen that even in economic downturns (which we’ve had many this summer), liquidations work well to prevent insolvency. So we’re comfortable with these lower liquidation ratios. Anchor would also allow users to generate MAI with USDC at a fixed rate to pay back loans if they find themselves in a risky position.
Pedro (Adamant): MAI being a stablecoin and being more and more used by people, do you plan on integrating other Dapps on the polygon ecosystem like other stablecoins do? I’m thinking about getting pools in Pooltogether or being able to be managed in Instadapp? The more exposure you have on big Dapps, the more people will likely use QI/MAI.
Benjamin (QiDao): Integrations are crucial for our long-term plan. Instadapp is a project we’re chatting with at the moment. They’re currently drafting a bounty that they will pay in order to integrate our protocol. This will provide a separate, and open source, UI for users to automate various actions in our protocol. It will also allow users to create their own products on top of QiDao. Another step, which will come after getting our Chainlink oracle, is getting MAI on lending platforms like CREAM. This will give users the ability to earn yield on their MAI without us having to emit Qi.
Pedro (Adamant): Are there any plans for developing self paying loan protocols where interest from locked collateral pays off the balance of borrowed MAI over time?
Benjamin (QiDao): Absolutely! I think that’s something that will be implemented through our partnership with Instadapp.
Pedro (Adamant): Somebody tells you to persuade them on why to buy or hold Qi instead of another blue chip, what will your answer be?
Benjamin (QiDao): I’m not into giving financial advice, but I love to analyze projects and their fundamentals. I think if you look at the price to earnings ratio for QiDao, it’s very low compared to its blue chip peers (most are above 10, we’re close to 1). This means that QiDao makes much more revenue compared to its price vs blue chips. In the financial world, this means buy — specially given the revenue distribution to Qi stakers. But whether you buy or not is wholly up to you.
Pedro (Adamant): One last question, about the future of the QiDao protocol, as many people asked about future plans for other blockchains. Is this on the roadmap? Or anything else in the future you want to mention before you head out?
Bejamin (QiDao): We’re for sure focused on perfecting what we have on Polygon first. I think that quality is better than quantity. We’re a good alternative to other decentralized coins, which can help chains diversify away from USDC and USDT (which come with their centralized baggage). There are two projects we’re working with on Solana that are going to be incentivizing MAI. That should be live within a week. This won’t affect our emissions and wont mean deploying outside of Polygon.
Pedro (Adamant): Thank you Benjamin! Please drop links to your socials!
Benjamin (QiDao): Thanks for having me! Happy to engage the addy coommunity If you want to get involved with QiDao, Discord is the place to be. Lots of cool events and of course great people.
We are looking forward to our next AMA! Stay tuned!