Original Title: "After Plasma and Falcon, Will USD.AI Become the Next Generation DeFi Gem?"

Original Author: Azuma, Odaily Planet Daily

Following Plasma and Falcon launching their tokens in a short period of time, with market capitalizations of over a hundred billion dollars and tens of billions of dollars, respectively, funds have begun searching for the next potential high-yield "DeFi gem." With prominent labels such as "AI + Stablecoin," "YZi Labs Investment," "Plasma Partnership," and "5 Billion Hard Cap," USD.AI has become the top choice in many users' minds.

The Fusion of AI and Stablecoin

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

On August 14, USD.AI announced the completion of a $13 million Series A financing round, led by Framework Ventures, with participation from Bullish, Dragonfly, Arbitrum, among others; later on August 26, YZi Labs announced an investment in USD.AI, with the specific amount undisclosed; then on August 28, USD.AI announced a partnership with Plasma, becoming one of the initial deployments on the Plasma mainnet launch day.

From USD.AI's perspective, the primary channel for the current emerging artificial intelligence industry still revolves around traditional financial yield-bearing products, such as loans, bonds, and convertible preferred stock. However, there is a clear gap between this financing form and market demand. Therefore, the protocol aims to build a financial layer tailored to the AI cycle to bridge this demand gap.

Specifically, USD.AI allows entities with financing needs to use hardware itself as loan collateral and restructures the related risk into standardized investable assets, earning returns from it—simply put, it will accept AI companies with graphics processing unit (GPU) hardware as collateral, issue them loans, and then distribute the loan returns to deposit collateral users.

The operation of the USD.AI protocol relies on three roles—the first is Depositors, who can obtain the stablecoin USDai through deposits, then stake it as sUSDai to earn protocol rewards; the second is Borrowers, usually small to medium-sized AI companies unable to meet their lending needs through traditional channels; the third is Curators, a relatively unique role responsible for providing first-loss capital, earning a 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. The first is the fully collateralized stablecoin USDai pegged to the US dollar (which currently has a premium). This stablecoin supports instant redemption. The second is the staking version stablecoin sUSDai, which allows for sharing protocol earnings (current staking yield is 13.22%). The price of sUSDai will gradually increase as earnings accumulate, and there is a 30-day unlocking period for unstaking.

Reward Program - ICO or Airdrop, Choose One

At its launch, USD.AI introduced a reward points program (Allo™) that corresponds to future ICO (FDV valuation of 3 billion USD) or airdrop rights. The potential value of these points is a key factor attracting users to the protocol.

However, it is important to note that the rewards corresponding to USD.AI's reward points can only be selected between ICO or airdrop. If you choose to earn points using USDai, you will receive ICO rights (total distribution of 70% of tokens), requiring KYC and a contribution; if you choose to earn points using sUSDai, you will receive airdrop rights (total distribution of 30% of tokens), with no KYC requirement or contribution.

USD.AI has clearly stated that a single address cannot receive both ICO and airdrop allocations. The user's total allocation will be based on their final point contribution value, allocated to either ICO or airdrop. To receive both, users must use two separate wallets to participate in the reward program.

As shown in the diagram below, users can earn points through USDai and sUSDai channels (including corresponding yields and point multipliers). The left side corresponds to ICO rights for USDai, while the right side corresponds to airdrop rights for sUSDai.

It is evident that whether through USDai or sUSDai, participating in LP on Pendle or purchasing YT provides the highest point multipliers (note that only the SY portion of LP is counted) and offers substantial annualized yields (42.21%, 36.59%). However, it is crucial not to rush in right now. Due to USD.AI's minting cap being reached, acquiring USDai is currently only possible through a secondary market purchase at a premium (approximately $1.03). Entering the market at this point may lead to significant slippage. It may be wise to wait for the next increase in the minting cap.

Is It Worth Mining?

As the popularity of USD.AI continues to rise, some FUD voices have emerged around the protocol, and the market's view of the protocol seems to be significantly divided.

On the bullish side, some believe that USD.AI combines the two popular narratives of "stablecoin" and "AI," making it an excellent hype target even without discussing the fundamentals; furthermore, USD.AI's lead investor Framework has recently achieved outstanding performance (also the lead investor of Plasma), coupled with the expected Binance listing brought by YZi Labs, further elevating the imagination ceiling of USD.AI; in addition, the several times USD.AI rapidly sold out after raising the deposit ceiling in the past also inevitably reminds people of Plasma.

However, the bearish side believes that USD.AI's introduced lending model has not yet been fully validated by the market, with AI companies that cannot obtain sufficient traditional financing as the main borrowers, which is actually a debuff. Whether this mechanism can remain effective in the long term is still an unknown; in addition, KOL "CryptoBrave (@cryptobraveHQ)" revealed that USD.AI's team is suspected to be composed of the core team of the former NFT project MetaStreet, which rug pulled in the past, potentially having a dark history...

Personally, after the launch of USD.AI in late August, I deposited some funds into the Pendle USDai LP, but my position was limited to a small percentage. In the future, I am considering increasing my holdings when the price is lower by purchasing some sUSDai YT.

For users who still intend to participate in USD.AI, I personally recommend trying to operate around Pendle within the risk range you can bear as much as possible (even if it's just for the basic income of the LP itself, the APY is ideal enough), but I really do not recommend entering at the current premium price—unless you believe that the returns during this period before the next quota opening can cover the nearly 3% loss. Whether to choose USDai for ICO participation or sUSDai for airdrops is a matter of personal preference.

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