QiDao introduces redeemable MAI on Base via a peg stability module.

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Introduction

For a CDP stablecoin like MAI, maintaining a stable peg to 1 USD is crucial to ensure trust and usability within its ecosystem. Market circumstances like hyper demand for borrowing or lack of leverage demand can impact any stablecoin’s peg.

To support and strengthen stability, a Peg Stability Module (PSM) has been introduced by the protocol. This module acts as a peg arbitrage mechanism for users to mint and redeem MAI with approved stable assets.

Overview

The Peg Stability Module acts as a vault with USD pegged assets as collateral, and MAI as a mintable asset. It provides users with a way to mint and redeem MAI stablecoins with other stablecoins. The module is designed to adjust the supply of the stablecoin in response to market demand, ensuring that it remains closely pegged to 1 USD.

Minting Process

The minting process allows users to obtain stablecoins by depositing their collateral into the Peg Stability Module. Here's how it works:

  1. Deposit Collateral: Users initiate the minting process by depositing the pegged asset (e.g., USDbC) into the Peg Stability Module.
  2. Minting MAI: Upon deposit, users are immediately eligible to mint stablecoins at a 1:1 ratio to the deposited asset value.
  3. MAI Distribution: The minted stablecoins are then immediately distributed to the user's wallet, completing the minting process.

Redemption Process

The redemption process allows users to redeem collateral assets with MAI stablecoins. Here's how it works:

  1. Initiation: Users initiate the redemption process by sending MAI stablecoins back to the Peg Stability Module.
  2. Public Withdrawals Queue: Upon initiation, users join the public withdrawals queue, where their redemption request is visible to all participants.
  3. Waiting Period: Users wait in the public withdrawals queue until their turn comes up. This waiting period ensures fair and transparent processing of redemption requests.
  4. Redemption: Once a user's turn arrives in the queue, they are eligible to redeem their MAI stablecoins at a 1:1 ratio minus a redemption fee for the collateral asset.
  5. Collateral Withdrawal: The redeemed collateral asset is then withdrawn from the Peg Stability Module and transferred to the user's connected wallet.

Benefits