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💸 Borrow Like a Billionaire with MAI Finance- DAO Issue #14

Jacob Van
Jacob Van
This week we are taking a look at a protocol enabling users to take out interest free loans against crypto assets. We are going to dive into Mai Finance and the QiDAO project. I hope you enjoy!

Have you ever tried to take out a loan against your crypto? If you ever go to a traditional bank and try to get one of these loans, you will probably get laughed out of the building.
Centralized platforms like Celsius Network and Coinbase offer these loans but typically charge 1-8% interest or more, require KYC, only offer to users in certain countries/states, and take multiple business days to complete. 
But thanks to the rise of Decentralized Finance, we are now able to access zero-interest lending. 
There are a few platforms out there that allow you to take out these interest-free loans, but my favorite at the moment is QiDAO Protocol, also known as Mai Finance.
What is Mai Finance?
Mai Finance allows you to borrow stablecoins against your crypto assets at a 0% interest rate.
The process is incredibly easy: create a vault, deposit your crypto assets, and start borrowing stablecoins against your collateral’s value.
It takes about 5 minutes in total.
When you deposit your crypto assets, you can borrow MAI, the platform’s stablecoin backed by your locked collateral tokens.
MAI can only be made through locking collateral to back its value.
Collateral can be static tokens like LINK and CRV, or interest-bearing tokens like yvDAI.
MAI is Polygon’s first native stablecoin protocol. However, you can also take out loans on the Fantom network. 
MAI can also be deployed on Solana and Avalanche. Check out the current makeup of circulating MAI.
The current Total Value Locked within the Mai Finance protocol sits around $86 Million. 
Benefits of Using MAI Finance
So why would you use this protocol? Here are a few good use cases for zero-interest loans:
✅ 0% Interest Leverage
✅ Debt consolidation
✅ Instant lines of credit 
Leverage can be a dangerous tool, so always use caution and do your own research. 
But these interest-free loans really open up a new world of possibilities to deploy your crypto assets.
For example, if you own some Bitcoin you can wrap it into wBTC, deposit it into a Mai Finance vault and borrow against it to invest in other crypto-assets such as Fantom.
In the example above, if both Bitcoin and Fantom increase in price, you realized more gains because you still own both the BTC and FTM, rather than selling one asset to buy the other.
But remember, it works the other way as well. You would see more losses if both BTC and FTM were to decrease in price.
Here are the available crypto assets you can currently borrow against via Polygon and Fantom respectively. 
Assets available on the Polygon Network
Assets available on the Polygon Network
Assets Available on the Fantom Network
Assets Available on the Fantom Network
How does MAI Finance profit without charging any interest? There are 3 main revenue streams for the protocol.*
Repayment Fees. When you pay back a loan, you will pay a repayment fee equal to 0.5% of the debt when repaying their stablecoin debt to unlock the underlying collateral. This fee is denominated in the collateral token.
Example: A user has 100 USD worth of Matic and 50 MAI (miMatic) in debt. They then repay 10 MAI. The fee paid by the user would be 0.05 USD worth of Matic (10 MAI * 0.5% fee).
Deposit Fees. Deposit fees are paid by users when they submit their liquidity pool (LP) tokens to participate in liquidity mining rewards. The fee is denominated in LP tokens and is equal to 0.5% of the LP token value.
Example: A user that provided 100 USD in liquidity will pay a 0.5 USD fee (100 USD * 0.5% fee) when depositing their LP tokens on the MAI rewards page.
Anchor Fees. There’s a 1% fee when minting MAI with stablecoins or redeeming stablecoins from MAI through Anchor. As a result, the price to mint 1 MAI is 1.01 accepted stablecoin and 1 accepted stablecoin can redeem 0.99 MAI.
Example: A user swaps 100 USDC for MAI on Anchor. The user will receive 99 MAI for this exchange (100 MAI - 100 * 1% fee). 
Qi Token
The last point to mention is the Qi Token, which is the governance token for the protocol. Holders of Qi are able to vote on changes to the QiDao Protocol. 
Here are some of the things Qi holders can vote on:*
  • Collateral types
  • Revenue distribution
  • Price oracle changes (where pricing comes from)
  • Risk parameters (i.e. liquidity ratio, debt value)
  • New collateral vault types (new tokens accepted to be used as collateral)
  • Change repayment fee
  • Upgrade to the system
  • Qi community treasury decisions
  • Qi holders will decide in a consensus how to distribute the treasury funds to pay for various infrastructure needs and services. The governance mechanism is designed to be flexible and upgradeable over time.
Qi tokens have a max supply of 200 Million. Here is a breakdown of the distribution:
  • Investor Allocation: <5% released linearly for 18 months
  • Keeper allocation: ~10% total vested over 3 years
  • Community Distribution: 85%
Qi has a current market cap of about $11 Million.
You can acquire Qi on Slingshot or by providing liquidity on Quickswap.
You also earn Qi simply by taking out loans on Polygon and keeping your collateral level within a certain range.
Conclusion
To summarize, MAI Finance allows you to take out interest-free loans on your crypto in minutes. 
With a TVL of $86 Million and a current market cap on its governance token, Qi, of just $11 Million, Mai Finance is a protocol to keep an eye on in the coming months. 
Thank you for taking the time to read this deep dive into Qi Dao. I will see you next week!
Did you know I have a Youtube channel? Check out my latest video on the recent meme coin mania!
My Problem With Shiba Inu and Dogecoin (MUST WATCH)
My Problem With Shiba Inu and Dogecoin (MUST WATCH)
*This information was pulled directly form the MAI Finance docs.
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Jacob Van
Jacob Van @jacobavan_

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