# USDai

**USDai** is the primary synthetic dollar of the USD.AI ecosystem. It's designed to function as a highly liquid, 1:1 USD-pegged asset that serves as the "base layer" for onchain financing.

While the broader protocol enables the tokenization and financing of AI infrastructure (GPUs), **USDai** itself remains a pure stablecoin. It is built for maximum composability across DeFi protocols, providing a stable medium of exchange without the volatility or hardware-linked risks associated with yield-bearing derivatives.

### Collateral & Backing

USDai is fully backed by highly-liquid treasuries, cash, and other cash-like instruments. Currently USDai is 100% backed by PayPal's PYUSD stablecoin. 

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**USDai** carries no exposure to GPUs or any loans originated by the protocol. It is strictly isolated from GPU depreciation, AI infrastructure credit risk, or hardware performance. These variables are contained exclusively within the **sUSDai** (Staked USDai) token.
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**USDai** is backed by a regulated stablecoin (PYUSD), the protocol supply is verifiable on-chain at all times. Minting is programmatically restricted; tokens can only enter circulation when the equivalent PYUSD is locked in the protocol.

### Minting and Redemption

In Q2 2026, USD.AI will [transition to a Whitelisted Market Model](https://usd.ai/insights/usdai-mint-redeem-upgrade) for direct protocol interactions. This structure prioritizes security and institutional compliance.

Direct minting and redemption at the smart contract level are restricted to:

* **Authorized Market Makers:** KYC-verified partners who manage primary liquidity.
* **Institutional Depositors:** Large-scale participants who have cleared the USD.AI Foundation’s compliance onboarding.

#### Why Whitelisting?

**Compliance**: Direct counterparty relationships ensure strict source-of-funds clarity for institutional partners.

**Security**: Restricting contract-level minting to verified entities effectively closes the attack surface for "infinite mint" and other common DeFi protocol exploits.

#### Market Access & Liquidity

USDai remains a permissionless asset. Any wallet can hold, transfer, stake, and unstake USDai without restriction. Secondary market access through DEXs and CEXs is unaffected. Staking USDai for sUSDai on app.usd.ai, QEV redemptions, Pendle integrations, and bridging all continue to work exactly as before.

For non-whitelisted participants: acquire USDai on a DEX or CEX, then stake on app.usd.ai to receive sUSDai and begin earning yield.

To support secondary market liquidity for USDai, $5M from Permian Labs (developer of USD.AI) will be used to seed a USDC-USDai liquidity pool on Arbitrum at launch as an interim measure, the pool will transition to protocol owned liquidity over time.

Unlike other stablecoin structures, USDai has no private key minting. Every unit is fully backed 1:1 by PYUSD.