# CHIP CHIP is the utility and governance token of USD.AI. It coordinates the standards, risk parameters, revenue fee streams, and market plumbing that enable the standardization of GPU-backed loans, which then become liquid and continuously priced. ## Governance CHIP Holders use CHIP to vote on the rules that determine how the protocol operates, what collateral is accepted, how loans are priced, and how the system evolves over time. Every core parameter of the protocol is subject to CHIP governance, making token holders collectively responsible for the integrity and direction of the system. The decisions made through CHIP governance have real consequences: they determine the quality of assets backing USDai, the rates paid by borrowers, and the long-term sustainability of the protocol. ### Collateral Standards CHIP governance controls which assets can enter the protocol as collateral and on what terms. Not all compute is equal collateral. The USD.AI Protocol currently accepts only enterprise grade GPUs, specifically current-generation and second-generation hardware, as eligible collateral for loans. This is a deliberate standard: resale liquidity and established pricing make hardware the most defensible for asset-backed GPU loans. CHIP governance controls these collateral standards and can, over time, extend eligibility to other hardware types or manufacturers if holders determine the risk parameters can be met. Every expansion of the collateral universe requires a governance vote, ensuring that any new asset class is subject to the same scrutiny applied to approved hardware today. The collateral standards CHIP holders govern include: * **GPU hardware eligibility:** currently spanning RTX Pro 6000, H200, B200 / B300, and GB200 / GB300 hardware. As new generations come to market, CHIP governance determines how they are onboarded. * **Risk parameters:** including maximum loan-to-value ratios and interest rate ranges. * **Hardware depreciation schedules:** applied when valuing collateral over the life of a loan, reflecting the real-world decline in resale value of GPU hardware. * **Meta-governance:** for adding new collateral tiers or sunsetting existing ones, ensuring changes are deliberate, transparent, and subject to holder approval. ### Interest Rate Parameters ​The USD.AI Protocol is the reference interest rate for GPU-backed credit, an onchain benchmark that does not yet exist in traditional or decentralized finance. Every major credit market scaled when a standard rate emerged: mortgage credit found its benchmark through standardized MBS, and corporate credit became liquid when spreads were made visible and tradable. GPU infrastructure is at that same inflection point. CHIP holders govern the parameters that produce this rate, shaping the cost of capital for AI infrastructure and connecting borrower rates directly to the yield environment for sUSDai holders. The interest rate parameters CHIP holders govern include: * **​Base reference rate:** applied to GPU-backed loans, which serves as the protocol's equivalent of a policy rate - the starting point from which all loan pricing derives. * **​Tier-specific rate adjustments:** differentiate pricing between offtake types and qualities (ie, investment grade offtake, non investment grade multi-year offtake, and on-demand spot rental). * **​Rate adjustment mechanisms:** allow the protocol to respond to changing market conditions, including utilization-based adjustments and governance-triggered adjustments voted on by CHIP holders. ### Loan Eligibility Criteria ​CHIP governance determines which borrowers can submit collateral to the protocol for tokenization. This is the intake gate for the system. Before any GPU asset can back USDai, it must meet criteria established through governance, criteria that define what qualifies as a USD.AI loan and who is eligible to borrow. CHIP holders set these standards collectively, ensuring that only properly structured, creditworthy facilities enter the pool and that the protocol's underwriting standards remain consistent and defensible. The eligibility controls CHIP holders govern include: * **​Minimum collateral coverage requirements:** establishes the floor for how well-covered each loan must be relative to the value of the underlying hardware. * **​Acceptable offtake contract structures:** defines minimum contract length, acceptable counterparty types, and the revenue coverage standards that make a contract sufficient to service the loan. * **​Geographic and jurisdictional restrictions:** determine which markets the protocol accepts collateral from and which it excludes, accounting for legal enforceability, regulatory clarity, and collateral recoverability. * **​Borrower profile criteria:** defines which categories of operators are eligible - currently neoclouds, data center operators, hyperscalers, and co-location providers with established infrastructure and revenue profiles. ### Protocol Upgrades & Integrations ​As the AI infrastructure market evolves, new hardware generations emerge, new lending markets develop, and the onchain ecosystem expands. CHIP governance is the mechanism through which the protocol adapts, authorizing changes to its technical architecture, expanding its asset universe, and integrating with the broader DeFi ecosystem. No material change to the protocol's infrastructure can proceed without a governance vote, ensuring that upgrades reflect the considered judgment of CHIP holders rather than unilateral decisions by any single party. The parameters CHIP holders govern include: * **​Smart contract upgrade approvals:** covers changes to the core protocol logic, risk engine, and any other on-chain infrastructure that governs how loans are originated, managed, and settled. * **​Oracle and data provider approvals:** determines which price feeds and data sources the protocol relies on for collateral valuation and rate-setting, including current integrations such as Chainlink. * **​External protocol integrations:** authorizing connections/grants/rewards with lending markets, DEX liquidity pools, and other DeFi infrastructure that extend the utility and reach of USDai and sUSDai.​ ### Protocol Fee Parameters ​CHIP governance sets the fee parameters that determine how the protocol charges for its services and how those fees are directed across the system. ​Every fee surface and every routing decision is subject to a governance vote, ensuring fee structures remain transparent, adjustable, and aligned with the long-term health of the protocol. #### Fee Surfaces Governed The USD.AI Protocol generates fees across four surfaces, each representing a distinct point in the loan lifecycle. CHIP holders govern the rate applied at each surface: * **​Origination fee:** charged at loan closing as a percentage of principal. This fee reflects the cost of bringing a new facility onchain and compensates the protocol for underwriting activity at the point of issuance. * **​Net interest margin:** the spread between the rate paid by borrowers and the rate passed through to USDai depositors. Governance sets the parameters that determine how wide this spread can be and how it adjusts with market conditions. * **​QEV fee:** applied to QEV redemptions.​ ## Staking Module ​CHIP can be staked for sCHIP for supplemental functions. The staking module is the mechanism through which sCHIP holders engage directly with the protocol's operations, not as passive holders, but as active participants with defined responsibilities and corresponding access to protocol activity. ### How Staking Works Staking CHIP begins by depositing tokens into the staking module smart contract. Depositors receive sCHIP in return. Unstaking is not immediate. Cooldown periods, set by governance, apply to all withdrawals from the module. These periods exist to ensure that the staking module maintains stability and that participants cannot frontrun shortfall events. ### The Backstop Function ​Staked CHIP serves a backstop function for the protocol. In the event of a shortfall, defined by governance as scenarios such as loan losses exceeding reserves or oracle failure, staked CHIP may be used to cover the deficit. ​The slash amount is capped by parameters established through governance vote, and governance itself defines what qualifies as a shortfall event, ensuring the backstop is invoked only under conditions that CHIP holders have explicitly anticipated and approved. This backstop role is what gives the staking module structural significance: stakers are active participants in the protocol's risk framework, with real obligations that correspond to their participation. ### ​Staking Parameters Exploration **NOTE:** the Foundation is actively exploring various upgrades to staked CHIP, so all the comments below are exploratory and are not definitive of what will be instated for CHIP utility, pending security, legal, and smart contract review. ​Every operational parameter of the staking module is governed by CHIP holders and subject to change through a governance vote: * **​Cooldown and unstaking period lengths:** determine how long a staker must wait after initiating a withdrawal before their CHIP is returned. * **​Slash percentage:** caps establish the maximum portion of a staker's position that can be used to cover a shortfall event, bounding the downside of participation. * ​**Module activation and deactivation conditions:** define the circumstances under which the staking module can be paused or shut down entirely, subject to a governance vote. ### Legal Disclaimer ​CHIP does not represent equity, ownership, or a claim on protocol assets. Holding or staking CHIP does not constitute an investment in the protocol. CHIP functionality is constrained to on-chain functions defined by smart contracts. Nothing on this page constitutes investment advice.