In this post I will review my experience using MAI finance (aka QiDAO) and explain how it meets my needs. MAI finance is a Polygon-native DeFi protocol. It has its own stablecoin (MAI), which is backed by a range of (mostly interest-bearing) vaults. Users deposit their collateral to mint MAI. The rate to pay back the MAI loan is 0% and the protocol earns revenue through other fees. The minimum collateral to loan ratio is 130% but it must be slightly higher to earn QI (pronounced ‘chee’) tokens (the protocol’s governance token) as a reward. There are other protocol features but my understanding is that MAI finance’s current focus is its offering of 0% loans for MAI using interest-bearing collateral. They are also expanding onto other EVM chains, most notably Fantom which seems to be doing very well.
Image credit - @sisuspeed via @wraithers
To understand how this DeFi protocol meets my needs, please allow me to indulge with the series of events that led to me choosing MAI finance. I became active on Polygon early this year (when it was still known as ‘Matic’ - feels like forever ago). I became involved with Aavegotchi early on (mid-2020) - they famously delayed their launch to avoid insane gas fees which would have killed the project and migrated wholly over to Polygon. To incentivise liquidity on Polygon they partnered with Quickswap (Polygon-native Uniswap fork) and offered pretty juicy GHST, FRENS (Aavegotchi tokens), MATIC and QUICK rewards. At that time the price of QUICK was around $20. Within a couple of months that had risen to an all-time-high of nearly $1500! A token I was earning I initially had no interest in was suddenly worth a lot more. After I missed out on the initial offering of Gotchis in March I spat the dummy and rage-quit. I sold all my GHST tokens and then all the NFTs I’d earned through bounties and raffles and consolidated into other assets on Polygon. For a time I was stablecoin farming and eventually moved into the ETH/BTC Sushi LP. Whilst I was annoyed with Aavegotchi, I profited a lot from their early liquidity mining incentives. Woop!
I first heard about QiDAO and MAI finance in August. I wasn’t really that engaged with all things DeFi at the time (was pretty obsessed from ‘DeFi summer’ 2020 until around May 2021) as my NFT obsession had taken over but I thought it sounded really cool. However the thing that concerned me was that it had such a low profile and not many people were talking about it so I forgot about it for a while.
Then around October I noticed that they were introducing dQUICK as a collateral type for their 0% MAI loans. dQUICK is the interest-bearing version of QUICK (staked QUICK). My understanding is that (under the hood), with the portion of fees generated from DEX trades that go to QUICK stakers, QUICK is bought on the market and pumped into dQUICK to auto-compound its value. I was already staking QUICK earned through my early involvement in Aavegotchi so I figured I could use it somehow, but how? At the time I was also staking ETH/BTC sushiswap LP tokens to earn SUSHI (and a bit of MATIC). I decided to go for ETH/BTC as a LP position over stablecoins because I figured there would not be much impermanent loss for this pair as they tend to move in price together and was bullish on them as long-term hodls. I made the decision to use the MAI to swap for ETH and BTC, thus increasing my LP position to earn more SUSHI. I’m also glad I made this move as I’d recently sold most of my liquid BTC outside of DeFi to buy more Counterparty NFTs!
The other thing I really liked about MAI finance was the community. I had lots of questions on discord and the folks on there were very helpful in answering them. But most of all, they were friendly and warm. I listened to a few podcasts and I got the feeling from hearing them speak that they were into this project as much for others as they were for their own profit. These experiences dispelled the concerns I had about the project being so under the radar. I’ve done a tiny bit of high-level research into the crazy ‘DeFi 2’ world of Abracadra Money, Wonderland and Popsicle finance - that’s a whole other rabbit-hole. But those projects seem to have a whole lot of marketing $$$ behind them and are growing at insane rates. MAI finance seem like they are trying to grow at a more sustainable rate - obviously with me choosing them over their competitors I hope that slow-but-steady wins the race.
My loan is now about six weeks old. My collateral to loan ratio was very conservative so my MAI loan was just over 800 USD. With that loan amount I average about 20 QI tokens a week and I’ve also started ‘boosting’ (similar to staking), which yields a small bonus on top of the regular rewards and gives increased DAO voting power. Cha-Ching.
In summary, here’s how MAI finance is helping me long term -
- increased the utility of an idle interest-bearing asset (dQUICK).
- with the MAI from my 0% loan, I was able to increase my ETH and BTC positions.
- my increased ETH/BTC LP position is helping me earn more SUSHI rewards.
- if BTC and ETH prices go up only then the amount required to pay the 0% loan back will be a lot less than when I borrowed.
- I’m earning QI rewards, a token with a very small marketcap which would appear to have a lot of upside.