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USDai Monitoring

This script monitors the USDai protocol on Arbitrum One, specifically the relationship between its supply and collateral backing.

Protocol Overview

  • Docs: Proof of Reserves Guide
  • Claimed Backing: 99.8% by TBills
  • Mechanism: USDai is backed by wM (Wrapped M) tokens. M is a token representing T-Bill yields from the M^0 protocol.
  • Backing Source: The M^0 protocol backs M tokens with off-chain T-Bills held in custody. wM is a wrapper that enables M to be used on other chains like Arbitrum, rebasing or accumulating value to reflect T-Bill yield.
  • Minting: Minting involves depositing wM into the USDai Vault, which ensures 1:1 backing for the minted USDai.

Metrics & Monitoring

We track the following key metrics to ensure solvency and stability:

  • USDai Supply: The calculated supply based on the wM balance held by the USDai Vault on-chain.
  • Mint Ratio: The collateralization ratio retrieved from the protocol API (0.995).
  • Collateral: Calculated as USDai Supply / Mint Ratio.
  • Buffer: Implied Collateral - USDai Supply. A positive buffer indicates the system is functioning within the expected Mint Ratio parameters.
  • Loans: Directly fetched from the Loan Router contract. Then calculated Active loan amounts / total USDai supply. to calculate the ratio.

Alerts

  • Buffer Drop: A Telegram alert is triggered if the Buffer value drops below $1M. A significant drop could indicate loss of backing value.

  • Loan Activity: A Telegram alert is triggered if the Total Verified Principal changes (indicating a new loan origination or a repayment).

  • Legacy Loan Expiry: A Telegram alert is triggered when the legacy loan (NVIDIA H200s) reaches its maturity date (July 2028).

  • Mint Ratio Change: A Telegram alert is triggered if the protocol's Mint Ratio changes from its previous value. This is a critical parameter that determines backing requirements.

  • Governance Events: We monitor for queued governance actions on the USDai Admin Safe and sUSDai Admin Safe contracts.

Contracts (Arbitrum One)

  • USDai Token (Vault): 0x0A1a1A107E45b7Ced86833863f482BC5f4ed82EF
  • wM Token: 0x437cc33344a0b27a429f795ff6b469c72698b291
  • sUSDai: 0x0B2b2B2076d95dda7817e785989fE353fe955ef9
  • Loan Router: 0x0C2ED170F2bB1DF1a44292Ad621B577b3C9597D1

Tenderly Monitoring

The following addresses and events should be watched via Tenderly alerts:

  1. Loan Router (0x0C2ED170F2bB1DF1a44292Ad621B577b3C9597D1):
    • Transfer: Monitor for minting/burning of Loan NFTs.
    • LoanOriginated (or similar): Monitor for new GPU loan creation.

Governance & Security

  • Access Control: The USDai token contract implements standard Access Control roles:
    • DEFAULT_ADMIN_ROLE (0x00...): Can grant and revoke other roles.
    • hasRole(role, account): Used to verify permissions.
    • getRoleAdmin(role): Determines who manages specific roles.
  • Upgradeability:
    • USDai Token: Is an upgradeable contract (ERC1967Proxy). We monitor for Upgraded events.
    • wM Token: Is an upgradeable contract (ERC1967Proxy). We monitor for Upgraded events.
  • Functionality:
    • Supply Control: Includes supplyCap and totalSupply.
    • Bridging: Includes bridgedSupply and eip712Domain (supports cross-chain/permit).
    • Swap Adapter: Contains a swapAdapter address for integrating swaps or redemptions.

sUSDai FAQ

How does it work?

sUSDai is a yield-bearing ERC-4626 vault token. It earns yield from M token emissions and by lending USDai to AI infrastructure pools (MetaStreet). It is not a stablecoin but a floating-price token representing a share of the lending portfolio and unallocated cash.

How to redeem it? Is there a queue?

Redemption is done via the app or directly on-chain. It involves an asynchronous request with a 30-day queue (average wait expected to drop to 15 days). Redemptions are processed periodically by the protocol admin. Users wanting instant exit must use secondary markets (DEXs like Fluid/Curve), which currently hold ~$20M liquidity on Arbitrum.

Can it have losses?

Yes. Unlike USDai (backed by T-Bills), sUSDai carries credit risk from its GPU-backed loans. If loans default and collateral liquidation is insufficient, the share price will drop, leading to principal loss. Redemptions use a "Conservative NAV" (Principal Only) to protect remaining stakers.

How is Price Per Share (PPS) defined? On-chain or Off-chain?

On-chain calculation using off-chain data. The contract calculates PPS on-chain (see redemptionSharePrice), but the underlying Net Asset Value (NAV) relies on off-chain loan health data. The system uses a dual-NAV model:

  • Optimistic NAV (Principal + Interest) for Deposits.
  • Conservative NAV (Principal Only) for Redemptions. A Chainlink oracle is used to convert pool positions into USDai value. Thus, while you can read the price on-chain, the inputs depend on the strategy's off-chain reporting.

Usage

Collateral/Supply/Loan Monitoring:

uv run usdai/main.py

Loan Calculation Methodology

The script calculates GPU loans by directly scanning the Loan Router contract for active loan NFTs held by the sUSDai Vault.

  1. Direct Read: It scans tokenOfOwnerByIndex on the Loan Router for the sUSDai address.
  2. Decoding: It decodes the raw loanState storage to extract the exact Principal Amount and Maturity Date.
  3. Legacy Loans: It includes hardcoded values for known legacy loan (NVIDIA H200s, $560k) that originated before the current Loan Router deployment.
  4. Total Principal: Sums these up to track the exact face value of active loans.

Governance Monitoring:

We monitor the following Safes for queued transactions using the shared Safe monitoring script:

  • USDai Admin Safe: 0xF223F... (2/4 multisig) - Admin of wM Token.
  • sUSDai Admin Safe: 0x783B... (3/3 multisig) - Admin of USDai Token (Vault) and sUSDai.

This runs every 10 minutes via GitHub Actions.

uv run safe/main.py