USDai Mint and Redeem Upgrade
USDai's mint and redeem architecture is upgrading to a whitelisted market model to support institutional adoption and strengthen security.
March 26, 2026
USDai's mint and redeem architecture is being upgraded.
Beginning April 6th, direct minting and redemption at the contract level will be restricted to a KYC'd set of whitelisted market makers and approved institutional depositors. Staking and unstaking of sUSDai will remain open to all users. A $5M USDC-USDai liquidity pool on Arbitrum will be seeded at launch to ensure deep secondary market liquidity.
This change is driven by two factors:
- Institutional adoption. As USD.AI has grown, the debt quality, asset pedigree, and compliance needs of origination partners and bridge lenders require a direct counterparty relationship for source of funds. Open minting does not meet that bar.
- Security. Recent DeFi exploits have made clear that unlimited, permissionless minting invites protocol attacks. Restricting contract-level minting to verified counterparties closes that attack surface.
What stays the same
USDai remains a permissionless asset. Any wallet can hold, transfer, stake, and unstake USDai without restriction. Secondary market access through DEXs and CEXs is unaffected. Staking USDai for sUSDai on app.usd.ai, QEV redemptions, Pendle integrations, and bridging all continue to work exactly as before.
For non-whitelisted participants: acquire USDai on a DEX or CEX, then stake on app.usd.ai to receive sUSDai and begin earning yield.
What is changing
Whitelisted minting and redemption
Minting and redemption at the protocol level will require whitelisting through USD.AI Foundation.
KYC-verified market makers and approved institutional depositors serve as the authorized counterparties for creating and redeeming USDai. Direct mint and redeem will be routed through market makers, with a 10 bps fee applied to redemptions.
This structure ensures source-of-funds compliance and adds guardrails around the minting process, reducing the attack surface that has led to significant losses across DeFi protocols in recent months.
Liquidity pool
To support secondary market liquidity for USDai, $5M from Permian Labs (developer of USD.AI) will be used to seed a USDC-USDai liquidity pool on Arbitrum at launch as an interim measure, the pool will transition to protocol owned liquidity over time.
Unlike other stablecoin structures, USDai has no private key minting. Every unit is fully backed 1:1 by PYUSD, which also explains why the wM to PYUSD collateral transition took over a month, the backing cannot be changed without a full collateral swap.
Market makers
Paxos approved market makers will be onboarded at launch. Professional market makers tighten spreads and improve secondary market depth relative to the current open model. A dedicated market maker will provide continuous coverage of mint and redeem flow during market hours.
Institutional depositors
The whitelist is not limited to market makers. Large direct depositors seeking protocol-level access without routing through a market maker can apply for whitelisting through the same KYC process. Whitelisted depositors have no market-making obligations.