# sUSDai

**sUSDai** is the yield-bearing token of the USD.AI protocol. 

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**sUSDai** is not a stablecoin. It is not instantly redeemable at par value. It represents a claim on underlying assets that include illiquid GPU-collateralized loans, and redemptions are subject to epoch-based timing constraints.
{% endhint %}

### Token Mechanics

**USDai** is staked to mint **sUSDai,** which captures yield from the underlying protocol activities in the exchange ratio between USDai and sUSDai . This appreciation mechanism means that **sUSDai** is not pegged 1:1 to any other asset.

#### **Conversion Rate Formula:**

The amount of **sUSDai** received from staking is determined by the current conversion ratio.

> sUSDai received = USDai deposited × (Total sUSDai Supply / Total USDai in Vault)

The amount of **USDai** received from unstaking:

> USDai received = sUSDai redeemed × (Total USDai in Vault / Total sUSDai Supply)

At protocol launch, the conversion rate was 1:1. Staking 100 USDai minted 100 **sUSDai**. As yield accumulates in the vault, the conversion rate shifts. If the vault holds 110 **USDai** backing 100 **sUSDai**, the rate becomes 1.10 **USDai** per **sUSDai**. Staking an additional 100 **USDai** would mint yield approximately 90.9 **sUSDai**.

#### Exchange Ratio

**sUSDai** employs a rebasing-by-price model rather than a rebasing-by-supply model. The number of **sUSDai** tokens a holder owns does not change; instead, each **sUSDai** token becomes redeemable for an increasing amount of **USDai** as yield accrues. 

### Yield Generation

Yield accrues continuously as:

* Interest payments are received from active AI infrastructure loans
* Idle capital generates returns from Treasury Bill allocations

#### GPU-Collateralized Loans

The USD.AI protocol generates yield primarily through asset backed, secured loans to AI infrastructure operators, typically data center operators acquiring GPU hardware. These loans are structured as follows:

* **Collateral:** Physical GPU hardware (NVIDIA B300, B200, H200, RTX Pro 6000, and other enterprise-grade high performance computing hardware)
* **Borrowers:** Data center operators, cloud compute providers, and AI infrastructure companies
* **Loan Purpose:** Hardware acquisition financing, analogous to equipment financing or secured asset-based lending
* **Interest Rates:** Variable based on LTV and offtake type, ranging from 7-15% APR

The loans function similarly to traditional equipment financing or mortgage structures, borrowers make periodic payments covering principal and interest, with the underlying hardware serving as collateral.

#### Secondary Source: Treasury Bill Floor

Capital not actively deployed in GPU loans is allocated to short-term U.S. Treasury Bills. This creates a yield floor for idle capital, minimizing any cash drag caused by timing gaps between deposit / staking events and loan originations. 

The T-Bill allocation serves two purposes:

1. Yield continuity: Depositors earn baseline returns regardless of loan deployment timing
2. Liquidity buffer: T-Bill positions can be liquidated to service redemptions without forcing premature loan terminations

### sUSDai Redemption Mechanics

Redemptions operate on a global 30-day epoch cycle. This is a protocol-wide timer, not a per-user countdown. Current withdrawal mechanics use a FIFO queue, with plans to transition to [QEV](https://docs.usd.ai/depositor/susdai/queue-extractable-value) in the future. 

**Timeline within each epoch:**

| Period               | Action                                                                    |
| -------------------- | ------------------------------------------------------------------------- |
| Day 1–29             | Users may queue unstake requests at any time                              |
| Day 29 (cutoff)      | Queue closes; no new requests accepted for current epoch                  |
| Day 30 (epoch close) | Protocol processes queued redemptions from available cash, USDai returned |

#### Queue Processing: FIFO with Cash Constraints

At epoch close, redemptions are processed as follows:<br>

1. **Available USDai is calculated:** This is **USDai** held in the vault that is not actively deployed in loans or reserved for imminent loan funding
2. **Queue is processed FIFO:** Redemption requests are serviced in the order they were submitted (first-in, first-out)
3. **Full USDai release:** The protocol releases all available free **USDai** to service the queue. There is no throttling or partial release mechanism
4. **Scenario A—Sufficient USDai:** If available **USDai** covers all queued redemptions, every request in the queue is fulfilled in full
5. **Scenario B—Insufficient USDai:** If available **USDai** is insufficient to cover all queued redemptions:
   1. Requests are fulfilled FIFO until **USDai** is exhausted
   2. Partially fulfilled requests receive their partial amount; the remainder carries forward
   3. Unfulfilled requests carry to the next 30-day epoch
   4. No priority is given except queue position

#### Critical Constraints

The protocol does not prematurely terminate or liquidate active GPU loans to satisfy redemptions. Loans run to maturity or scheduled paydown. This means:

* During periods of high utilization (most capital deployed in loans), available cash may be limited
* Redemption queues may extend across multiple epochs during high-utilization periods
* Users cannot force immediate liquidity from the protocol

#### QEV

A Queued Redemption Engine with auction-based priority (see: [QEV](https://docs.usd.ai/depositor/susdai/queue-extractable-value)) is planned but not yet implemented as of April 2026. QEV will allow users to bid for priority in the redemption queue, providing a mechanism for time-sensitive exits at a cost. Implementation timeline and specifications are not finalized.

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