# 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.
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### 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
Capital inflows, or borrower ordinary-course payments, are routed automatically and programatically:
1. Borrowers make payment into the relevant wallet. The protocol recognizes that as a loan payment.
2. Capital follows the defualt Loan Router waterfall distributions.
3. Relevant yield is attributed to the Participation NFT and overall NAV is updated.
Further detail can be found in the Technical Protocol Overview.
#### 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](/depositor/susdai/queue-extractable-value.md) 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:
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](/depositor/susdai/queue-extractable-value.md)) 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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