Backing
The current source documentation describes USDai as backed by PYUSD and cash-like reserve assets. The supply and backing should be verified against live protocol data before making financial decisions.
Minting & Redemption
Primary contract-level minting and redemption may be restricted to approved counterparties under the applicable compliance model. Secondary-market holding, transfer and supported DeFi use can remain permissionless.
Protocol Role
USDai functions as the liquid unit used to enter or exit the yield-bearing side of the system. Staking USDai produces sUSDai at the prevailing share conversion rate.