Mai Finance is a decentralized application (dApp) that serves as the user interface for the QiDao Protocol, an open-source, non-custodial stablecoin protocol. The protocol allows users to borrow a USD-pegged stablecoin, MAI, at a 0% interest rate by using their cryptocurrency holdings as collateral. The system is governed by a decentralized autonomous organization (DAO) through its native token, QI. ^{[1] [2]}​

Overview

Mai Finance enables users to lock their crypto assets into smart contracts known as "Vaults" to mint (borrow) MAI, a stablecoin soft-pegged to the U.S. Dollar. The core value proposition of the protocol is its 0% interest borrowing model. Instead of charging variable interest on loans, the protocol generates revenue through a one-time repayment fee charged when a user repays their debt to reclaim their collateral. This model allows asset holders to access liquidity from their holdings without selling them or incurring compounding debt. The protocol was created by a pseudonymous team, with a key contributor known as "0xLaoZi". ^{[1] [3] [4]}​

The protocol is governed by the QiDao community, and holders of the governance token, QI, can vote on proposals to manage protocol parameters such as fee structures, collateral types, and risk management settings. Revenue generated from fees is partially distributed to users who stake the QI token. A key technical feature of Mai Finance is its native multi-chain deployment, which allows MAI to be minted directly on numerous blockchains, reducing the risks associated with bridged assets. ^{[2] [5]}​

History

The QiDao Protocol launched in May 2021, initially on the Polygon network. ^[4] Following its launch, the protocol expanded its presence to other blockchains throughout late 2021 and 2022, including Fantom, Avalanche, Optimism, and Arbitrum. ^[5] By January 2022, the protocol had reached a milestone of $200 million in Total Value Locked (TVL). ^[6]​

Mai Finance has faced several challenges and security incidents. In May 2022, the protocol was indirectly affected by the collapse of the Terra ecosystem. Its vault that accepted Anchor Protocol's aUST (a wrapped version of Terra's UST stablecoin) as collateral was drained as the value of UST dropped to nearly zero, contributing to a significant de-pegging event for MAI. ^[1]​

A more direct security event occurred on April 8, 2022, when an exploit related to the protocol's integration with Superfluid on the Polygon network allowed an attacker to mint approximately $13 million worth of MAI without sufficient collateral. This unauthorized minting caused a severe de-pegging of the MAI stablecoin. The QiDao team created a compensation plan for affected users and implemented buybacks and other stability measures to restore the peg. Prior to this, in February 2022, the project's vesting contract was exploited, though user funds in vaults were reported to be safe. ^[5]​

The MAI stablecoin has experienced other periods of price volatility. In October 2023, MAI de-pegged significantly, falling to an all-time low of approximately $0.65. ^[3] These events highlight the risks associated with crypto-collateralized stablecoins, particularly during periods of high market stress or following exploits. ^[7]​

Technology and Mechanism

QiDao is a fork of the MakerDAO protocol and operates on a similar model of overcollateralized debt. ^[8] Its architecture is built around several core components that work together to facilitate borrowing and maintain stablecoin solvency.

Vaults and MAI Minting

The primary function of Mai Finance is to allow users to mint MAI through a system of "Vaults," which are non-custodial smart contracts functioning as Collateralized Debt Positions (CDPs). The process is as follows: ^[4]​

1. Deposit Collateral: A user deposits an approved crypto asset into a Vault.
2. Mint MAI: The user can then mint (borrow) MAI stablecoins against the value of their collateral.
3. Overcollateralization: All debt is overcollateralized, meaning the value of the locked collateral must be higher than the value of the borrowed MAI. Each Vault has a Minimum Collateral Ratio (MCR), which varies based on the volatility of the underlying asset. For example, a stablecoin like USDC may have an MCR of 110%, while a more volatile asset like MATIC might require an MCR of 150% or higher. ^[5]
4. Repayment: To retrieve their collateral, the user must repay the borrowed MAI principal plus a one-time repayment fee. There is no recurring interest on the debt. ^[9]

MAI Stablecoin and Peg Stability

MAI is a decentralized stablecoin soft-pegged to the U.S. Dollar. On the Polygon network, it is often identified by the ticker miMATIC. The protocol employs several mechanisms to maintain this peg: ^{[3] [1]}​

• Over-collateralization: The primary stability mechanism ensures that every MAI in circulation is backed by crypto assets of a greater value.
• Arbitrage: Market incentives help maintain the peg. If MAI trades below 1, profiting from the difference. If MAI trades above $1, users are incentivized to mint MAI and sell it, increasing supply and pushing the price down toward the peg. ^[1]
• Redemption Mechanism: The protocol allows for direct redemptions, where 1 MAI can be exchanged for $1 worth of collateral from the system. This provides a hard price floor and a definitive way to enforce the peg. ^[5]
• Peg Stability Module (PSM): Also referred to as the "Anchor" module, the PSM allows users to swap other approved stablecoins (like USDC) for MAI at a 1:1 ratio, minus a small fee. This creates a direct arbitrage channel that helps keep MAI's price close to $1. ^[4]

Liquidations

If a Vault's collateralization ratio falls below its required MCR due to a drop in the collateral's price, it becomes eligible for liquidation. In a liquidation event, the Vault's MAI debt is repaid by a third-party liquidator, who in return receives the deposited collateral at a discount (a liquidation penalty, typically 10%). This process ensures the protocol remains solvent by closing undercollateralized positions before they become bad debt. The liquidation penalty also serves as a source of revenue for the protocol. ^{[1] [5]}​

Multi-Chain Architecture

A key differentiator for MAI is its native multi-chain design. Unlike stablecoins that are minted on one primary chain and then bridged to others, MAI is minted directly on each supported blockchain using collateral from that specific ecosystem. This approach is intended to eliminate the systemic risk associated with a centralized bridge being compromised. ^[2] The protocol is deployed on over 15 blockchains, including:

• Polygon
• Ethereum
• Base
• Avalanche
• Arbitrum
• Optimism (OP Mainnet)
• Fantom
• Gnosis Chain
• BNB Smart Chain (BSC)
• Moonbeam
• Moonriver
• Metis
• Celo
• Linea ^{[1] [10]}

Accepted Collateral

The protocol accepts a wide variety of crypto assets as collateral, which are approved via governance votes. These include major cryptocurrencies (like ETH and BTC), stablecoins, and various interest-bearing tokens, such as Aave's aTokens, Stader Labs' MaticX, and Liquidity Provider (LP) tokens from decentralized exchanges like Balancer and QuickSwap. ^{[1] [9]}​

Oracles

For accurate and secure price data, which is essential for calculating collateral values and triggering liquidations, the QiDao Protocol exclusively uses Chainlink Price Feeds. This is a measure to mitigate risks related to price manipulation. ^{[4] [8]}​

Protocol Economics

Revenue Model

While charging 0% interest on loans, the QiDao protocol generates revenue through several fees: ^[9]​

• Repayment Fee: A one-time fee, typically 0.5%, is charged on the debt amount when a user repays their loan to unlock their collateral. This fee is paid in the collateral asset. ^[8]
• Liquidation Penalties: A penalty is applied during liquidations, with a portion of the proceeds directed to the protocol. ^[1]
• Anchor Module Fee: A fee is charged for minting or redeeming MAI through the Peg Stability Module (Anchor). ^[8]
• Direct Deposit Module (DDM) Revenue: The protocol deploys its protocol-controlled assets into external money markets to earn interest. ^[8]

Revenue Distribution

The revenue collected by the protocol is distributed between the DAO treasury and stakers of the QI token. According to an analysis by Exponential.fi, the distribution is as follows:

• Repayment Fees: 30% to QI stakers, 70% to the treasury.
• Anchor Fees: 30% to QI stakers.
• DDM Revenue: 50% to QI stakers, 50% to the treasury.
• Deposit Fees on LP Tokens: 100% to QI stakers. Rewards for stakers are collected weekly and distributed on the following Wednesday. ^[8]

Governance and Tokenomics

QI Token

QI is the native governance and revenue-sharing token of the QiDao Protocol. QI holders can create and vote on QiDao Improvement Proposals (QIPs) to influence protocol parameters, such as adding new collateral types, adjusting fees, or allocating treasury funds. This governance process typically begins with community discussions (QiDao Community Ideas or QCIs) before being formalized into a QIP for a vote on platforms like Snapshot. ^{[1] [6]}

eQI and aveQI

To participate in governance and earn protocol revenue, users can lock their QI tokens. In return, they receive an escrowed, non-transferable token (referred to as eQI or aveQI). The amount of eQI received is proportional to the amount of QI locked and the duration of the lock, which can be up to four years. Holding eQI provides holders with two main benefits:

1. Boosted Voting Power: Greater influence in governance votes.
2. Enhanced Revenue Share: A larger share of the protocol's revenue, distributed in MAI. Holders of aveQI can also participate in gauge weight voting to direct QI token emissions to specific liquidity pools and farms within the ecosystem. ^{[9] [4]}

Partnerships and Integrations

Mai Finance has integrated with numerous projects across the DeFi ecosystem. Key partners include:

• DEXs and Liquidity: QuickSwap, Balancer, and Curve for liquidity pools and trading.
• Lending and Yield: Aave and Beefy Finance, whose interest-bearing tokens are used as collateral.
• Infrastructure and Oracles: Chainlink for price feeds and Polygon as a primary deployment chain.
• Cross-Chain: Squid for cross-chain swaps and routing.
• Insurance: Insurace for providing smart contract cover.
• Fiat On-Ramp: Mt Pelerin. ^[1]