QiDao operates as a community-run, self-sustaining protocol that enables users to take out interest-free stablecoin loans by using their crypto holdings as collateral. These loans are issued and settled in miTokens, which are stablecoins softly pegged to the USD.

When a user deposits tokens into a vault as collateral, miTokens are generated. For instance, locking Matic tokens allows for the minting of miMatic. This process lets users utilize the soft dollar-pegged miMatic while still retaining ownership of their original locked Matic assets.