YZi Labs Backs AI Hardware as Collateral in DeFi Revolution

YZi Labs, the investment arm of Binance founders Changpeng Zhao and Yi He, has announced its latest venture capital commitment to USD.AI, a stablecoin protocol that leverages AI hardware as collateral for loans. This investment marks a strategic step into the AI infrastructure financing space, where demand for high-performance computing is surging. USD.AI’s model allows operators to secure financing by pledging their GPU assets, enabling the protocol to issue yield-bearing stablecoins backed 1:1 by the value of these hardware assets. This innovative approach aims to streamline access to capital for AI infrastructure developers, bypassing traditional financial intermediaries [1].

The USD.AI stablecoin protocol has already achieved $62 million in total value locked (TVL), indicating strong early adoption and trust in the model. The protocol has secured lending partnerships with several DeFi platforms, including K3 Capital, Concrete, Euler, and Pendle, which support its AutoVaults feature. This collaboration enables AI operators to leverage their hardware more efficiently, with USD.AI facilitating quicker loan closures—typically within seven days—compared to the traditional 60–90 day timelines [3]. This efficiency is particularly important in a market where rapid scaling and access to capital are critical.

YZi Labs emphasized its focus on backing projects that bridge real-world demand with blockchain innovation. In a statement, Dana Hou, Investment Partner at YZi Labs, highlighted that the firm is interested in supporting builders who create financial tools for underserved markets, such as AI hardware operators without traditional financial connections. “We back builders who bridge Web3 rails with real-world demand,” Hou said, underscoring the firm’s strategic vision to expand the utility of blockchain in tangible economic sectors [1].

However, the model is not without risks. AI hardware, particularly GPUs, can experience rapid depreciation and fluctuation in value due to technological advancements and market shifts. This presents unique challenges for collateral valuation compared to traditional assets. Despite these risks, USD.AI’s approach reflects a broader trend in the crypto industry, where firms are increasingly exploring hybrid models that combine real-world assets with digital finance to unlock new value [1].

David Choi, co-founder of USD.AI, described the stablecoin as a financial primitive for a new class of builders. He emphasized the need for accessible, scalable financial tools in the AI industry, where many operators lack traditional financial infrastructure. “Not everyone has a CFO or a Wall Street connection. But they do have machines, and a future to build,” he said, highlighting the potential for decentralized finance to democratize access to capital in high-growth sectors [1].

As AI continues to consume significant capital and infrastructure resources, USD.AI’s model could play a role in bridging the gap between innovation and funding. With USD.AI’s TVL and strategic lending partnerships already in place, the project is positioned to influence how AI operators access liquidity. The investment from YZi Labs further validates the potential of this approach, as the Binance-linked fund continues to explore opportunities at the intersection of AI and DeFi.

Source:

[1] YZi Labs invests in USD.AI stablecoin, backed by AI hardware (https://crypto.news/yzi-labs-invests-in-usd-ai-stablecoin-backed-by-ai-hardware/)

[2] B Strategy Unveils Plans for Binance Coin Treasury Firm (https://finance.yahoo.com/news/b-strategy-unveils-plans-binance-150057252.html)

[3] YZi Labs Backs USD.AI's Hardware-Collateralized Lending (https://coinmarketcap.com/academy/article/yzi-labs-backs-usdais-hardware-collateralized-lending-protocol)