# HAI - A decentralized and overcollateralized stablecoin

By [Everything Blockchain](https://paragraph.com/@everythingblockchain.com) · 2024-07-01

blockchain, crypto, cryptocurrency, optimism

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Ever heard the saying “Don’t get high on your own supply”?

Well, HAI flips that on its head

Use LSTs & OP native assets as collateral to get HAI — a decentralized and overcollateralized stablecoin

Ready to get HAI? Let’s dive in

![](https://storage.googleapis.com/papyrus_images/f34d9a7e526247d3882d64e586dc2fe8.jpg)

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1/ Introduction to [@letsgethai](https://x.com/letsgethai)

Largest CDP protocol on [#Optimism](https://x.com/hashtag/Optimism?src=hashtag_click)

Where you can deposit collateral like WETH, wstETH, rETH, OP, etc., and take a loan in HAI

Over 45% of TVL across all CDPs on OP is in HAI Vaults

![](https://storage.googleapis.com/papyrus_images/4a01dcbf9884d7ae9d11f390e5bd1de7.png)

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2/ HAI An over-collateralized CDP-minted stablecoin

Has a diverse collateral base including LSDs & other tokens

Uses a floating peg, unlike USDC/USDT, which are hard pegged to the $

The peg is set by a Proportional-Integral-Derivative (PID) controller to induce stability

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3/ HAI has two important prices

• Market Price (MP): What people are paying for HAI in the market

*   Redemption Price (RP): What the HAI system believes HAI should be worth, initially $1
    

![](https://storage.googleapis.com/papyrus_images/bd9f7b018a2cadc538396a8f67609ec1.jpg)

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4/ HAI mechanics

The system uses a smart PI controller to adjust HAI’s value

If MP > RP

The system sets a negative interest rate, making it cheaper to owe HAI over time

This encourages selling HAI to stabilize the price

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5/

If MP < RP

The system sets a positive interest rate, making it more expensive to owe HAI over time

This prompts buying HAI to pay off debts, pushing the price up

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6/

These adjustments help keep HAI’s value close to $1, balancing supply and demand

Basically, HAI’s smart controller tweaks interest rates based on market conditions to keep its value stable

HAI is a multi-collateral fork of RAI [@reflexerfinance](https://x.com/reflexerfinance) with the same basic mechanics

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7/ Simplified

The market price of HAI can’t deviate from the RP for too long due to smart incentives

*   If the price is too high, people borrow and sell HAI
    
*   If the price is too low, borrowers buy back HAI
    

This helps keep HAI’s value stable and in line with its target RP

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8/

Ensuring that it remains a reliable and predictable stablecoin

Users must carefully manage HAI minting

If collateral value drops too much, it can be seized and sold in a collateral auction to protect HAI’s value and ensure confidence in the protocol

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9/ KITE

Governance token for ensuring a decentralized and community-driven approach

KITE holders can vote on system changes and the protocol’s development, like adding/removing collateral types

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10/ Plus, HAI boasts the best dapp design in the game

It’s user-friendly and efficient

Easy to deposit collateral and take out loans

Check it out for yourself and get HAI on your own supply

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11/ Official Links

Discord  
[https://discord.com/invite/pX8m6zXNKu…](https://discord.com/invite/pX8m6zXNKu…)

X  
[@letsgethai](https://x.com/letsgethai)

Telegram   
[https://t.me/+0iIhX0f9DDAxODE5…](https://t.me/+0iIhX0f9DDAxODE5…)

Website  
[https://www.letsgethai.com/](https://www.letsgethai.com/)

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*Originally published on [Everything Blockchain](https://paragraph.com/@everythingblockchain.com/hai-a-decentralized-and-overcollateralized-stablecoin)*