In this edition, we’ll be providing you with some insights into Qi DAO, a stablecoin protocol built on the back of Collateralized Debt Positions (CDPs).
Also, be sure to tune in to our 1st What’s On Our Mind (WOOM) live stream. This new stream will feature Nick Drakon and Souvlaki Tuesdays at 11AM EST. If you can’t catch it live, the recording will be available to watch on our channel as well.
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Arbitrum x Qi DAO Twitter Space
Preview: Churro hosts Benjamin to discuss Qi Dao, revolutionizing stablecoins, and more! Click here to listen to the full episode (40 mins).
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Background
Churro (Host) – Contributor at Arbitrum Foundation
Benjamin (Guest) - Contributor at Qi Dao
Arbitrum - Arbitrum is a technology suite designed to scale Ethereum.
Offchain Labs - Building Arbitrum for Secure, Limitless Ethereum dApps
Qi Dao - a stablecoin protocol utilizing collateralized debt positions (CDPs), allowing users to mint the stablecoin $MAI pegged to the U.S. Dollar with 0% interest
Mai Finance - the frontend/dashboard for the Qi Dao Protocol which allows users to connect to the QiDao Protocol via a website
Qi Dao: A Cross-Chain CDP Stablecoin with Multiple Hats and Collaborative Growth.
Benjamin identifies himself as the "janitor" of Qi Dao, implying his role involves wearing multiple hats in the team.
Benjamin says that Qi Dao is pronounced as 'Chi Dao' in Chinese. He explains Qi Dao as a collateralized debt position (CDP) stablecoin and the first cross-chain CDP stablecoin. He says that being on several chains is crucial, as not everyone can afford to be on Ethereum mainnet. This strategy leads to them having more users than similar platforms like Liquity and MakerDAO.
Benjamin recognizes the challenges and drama they face in the crypto world. He stresses the importance of their level-headedness when choosing new collaterals and partners.
Churro asks about the benefits of MAI - Qi Dao's stablecoin.
Benjamin says that $MAI provides users with 0% interest loans on various chains against mostly gas tokens and liquid staking tokens (LSTs). He mentions that Mai Finance offers loans against governance tokens at a low-interest rate. He says that Qi Dao is on more chains than any other DeFi project which allows users to mint stablecoins directly on their chosen chains.
Benjamin says that being a cross-chain stablecoin enables them to move value between chains without touching Ethereum. He praises the team at Offchain Labs and notes that Qi Dao was one of the first CDPs to launch on a layer-2.
Benjamin considers Arbitrum to be unique in its dynamics within the DeFi ecosystem. He has seen a surge of new DEX and liquidity, especially after the ARB allocations. He appreciates the emergence of new active contributors like Radiant, Aave, Kronos, and Ramses providing low-cost liquidity for projects, and facilitating more launches. He highlights the importance of partnerships like Liquity and Frax.
Churro appreciates the ethos of collaboration and sharing within the Arbitrum ecosystem. He believes the DeFi ecosystem is unique because everyone is open to collaboration and building together. He highlights the rapid organic evolution of the DeFi ecosystem since 2020.
Benjamin agrees with the sentiment of organic growth within the Arbitrum ecosystem instead of forced farming tactics seen on other chains to bootstrap liquidity. He believes this relationship-based and retail-based growth is healthier and more sustainable in the long run.
Benjamin says that LSTs are valuable, and their use has been significant. He also appreciates the variety of LSTs available to choose from on Arbitrum and Optimism.
Unsustainable Legacy Stablecoins, Rising Interest Rates, Collaborations, and Exciting Roadmap
Churro asks Benjamin for his thoughts on the future of borrowing and lending in the DeFi ecosystem.
Benjamin shares his belief that many legacy stablecoins are not functional, especially outside of Ethereum. He explains that these stablecoin platforms are not profitable, and sees the current scenario as unsustainable. He predicts that interest rates will rise significantly in the next few years.
Churro asks about the implications of the interest rate hikes for lending stablecoins, and Benjamin says that it will largely depend on the market they're in. He suggests the traditional markets may not be as affected, whereas platforms like Qi Dao might see increased interest rates.
Benjamin describes Qi Dao's governance process as a tier system, with voting power distributed among token holders, active community members, and the development team. He highlights the importance of community involvement and mentions how active members control what proposals get put forward and approved.
Benjamin talks about an interesting proposal involving a migration to QiDAO’s 80/20 to Balancer, changing their current model to a new governance token with an LP of QI and MIMATIC. He suggests that this change could reduce expenses, increase the depth of the token in the liquidity pool, and help in reducing volatility.
For projects looking to collaborate, Benjamin highlights numerous benefits. They are the largest on-chain use case for Metis and have significant user bases for other chains. They offer loans against governance tokens with Chainlink oracles and can integrate certain assets as collateral.
Benjamin says that they are keen to collaborate with projects on Arbitrum. They are aiming to make DEXs more censorship resistant by reducing their reliance on USDC and pairing it with stablecoins like FRAX.
On bridging, Benjamin explains their unique approach called "canonical bridging". This allows them to allocate and control the bridging capabilities of various bridges to maintain security and adaptability. If a bridge turns bad, they can shut it off.
In terms of speed, using their main bridges (Axelar and Stargate), it typically takes between 10 to 30 minutes to bridge over to the desired chain.
Benjamin reveals exciting plans for Qi DAO’s roadmap, including a migration to a new governance model which could save considerable costs, integration with Axelar and Stargate, and the development of a cross-chain governance module. This open-source module would be designed to manage a DAO across multiple chains.
More projects are starting to see the benefit of 80/20 governance tokens