Background

QiDao allows users to take out interest-free loans backed by approved crypto-currency collateral. For example, you deposit $130 worth of ETH, and can borrow up to $100 worth of Mai (QiDao’s USD-pegged stable coin).

Qi is QiDao’s native governance token. Qi is used to vote on community proposals. For the first three years of the project, every week, holders of Qi are airdropped additional Qi.

Qi is also distributed to users who take out loans in certain collateral types. So in the above example, in addition to getting a Mai loan, you will also receive weekly airdrops of Qi.

Every two weeks, the QiDao community votes on which collateral-types will continue to receive airdrops. The more votes a collateral gets, the higher their subsequent airdrops will be. This is similar to Curve’s tokenomics. This has led to the “QiWars” between Fantom and Polygon projects, with projects on both networks competing to get the lion’s share of new Qi.

A user can choose to lock up their Qi for a period of time up to 4 years to receive eQi. eQi represents boosted Qi, based on how long the Qi is locked for. The longer the lock-up, the higher the subsequent weekly airdrops and voting power. Users continue to receive these weekly airdrops while their Qi is locked for eQi. Obviously there is a trade-off here: users receive higher weekly yield if they lock up for the full 4 years, but then cannot transfer or exit their Qi position (although they are free to use, transfer, or sell the weekly airdrops).

Thus, it should be apparent that Qi has value for 2 reasons: (1) Qi is a yield-bearing token, paying out weekly airdrops (if unboosted, roughly 11% APR at current prices. If fully boosted, roughly 45% APR); (2) Qi has voting power, which can be used to increase the amount of weekly airdrops borrowers receive