QiDao Protocol Partnership

Partnership with QiDao Protocol: add FXS as collateral for MAI, start a FRAX-MAI stable LP on Polygon, and add MAI as collateral for FRAX.

Original governance forum link: https://gov.frax.finance/t/partner-with-qidao-protocol/596

Background

QiDao is a collateral debt position (CDP) stablecoin protocol behind MAI. MAI is backed by a basket of assets, ranging from stable assets to volatile assets. The following tokens hold the largest shares of collateral for MAI: WETH (23%), MATIC (19%), and WBTC (15%). There is no USDC backing MAI at the time of writing.

MAI can currently be minted on 5 chains and can be bridged to 12 chains, with a TVL of $150M.

Partnership details:

• QiDao adds FXS as collateral for MAI. This will allow users to mint MAI stablecoins at 0% interest against their FXS (while maintaining ownership of their FXS). Approving FXS as collateral on Polygon will approve it as collateral on all chains where MAI can be minted. That is currently Polygon, Fantom, Avalanche, Moonriver, and Harmony.
• Frax mints 2M MAI at a safe LTV ratio (50%)
• Frax creates an LP with the minted MAI and FRAX
• QiDao will secure incentives from the DEX that LP is deployed on to maximize volume and TVL
• Add MAI as a collateral asset for minting/redeeming FRAX natively on Polygon

Motivation:

• FXS holders will be able to use FXS without spending it. There’s no interest cost for minting MAI against collateral.
• FXS vaults will be eligible for MAI borrowing rewards. These rewards are decided on twice a month through a gauge voting system.
• As QiDao continues to expand to other chains, FXS will be already whitelisted as collateral on new chains.