USDi Token: Solving the Purchasing Power Gap in Stablecoins

Geopolitical tensions involving a war with Iran and the closure of the Strait of Hormuz have triggered oil price shocks, reviving investor concerns over inflation and driving interest in a new class of inflation-linked stablecoins. USDi, a token co-founded by Michael Ashton and Andrew Fately, is designed to preserve purchasing power by tracking inflation rather than maintaining a fixed nominal peg to the U.S. Dollar.

According to reporting from CoinDesk, the current stablecoin market, valued at approximately $300 billion and dominated by dollar-pegged tokens, provides essential infrastructure for payments and trading. However, Ashton argues that these assets only address the medium-of-exchange function of money and fail to serve as a true store of value.

The stablecoin boom has accidentally rebuilt only half of the monetary system. Stablecoins solved the medium-of-exchange problem for crypto, but nobody solved the store-of-value problem. USDi is the first serious attempt to finish building the monetary system onchain.

Michael Ashton

Inflation Data and Market Drivers

The push for inflation-hedging assets comes as U.S. Inflation accelerated to 0.9% last month, a rise driven primarily by energy costs associated with the conflict in the Middle East. This follows a February headline increase of 0.3%. While headline inflation rose, core inflation, which excludes food and energy costs, fell short of market estimates.

USDi operates by adjusting its value based on Consumer Price Index (CPI) data and the performance of Government Inflation Protected Securities (TIPS). Unlike traditional stablecoins, USDi is not directly tied to the U.S. Dollar but instead orbits its value, with an exchange rate that fluctuates based on changes in U.S. Inflation.

The token calculates total inflation based on a start date set in December 2024. As CPI reports are released monthly, the price of USDi is adjusted to reflect these changes. As of April 17, 2025, the value of USDi was reported at $1.00863.

Institutional Application and Mechanism

To ensure a responsive reflection of inflation, the USDi system utilizes data most frequently used by TIPS investors. Ashton manages a reserve fund to maintain the stability and functionality of this mechanism.

The token is positioned as a tool for institutional treasurers and payment platforms seeking to avoid real-term value erosion. Potential early adopters include insurance companies and education finance programs, as the token could enable customized inflation hedging for specific costs such as tuition and health care.

This approach aims to provide a more precise alternative to traditional financial instruments for institutional players who require specific exposure to inflation metrics to protect their portfolios from declining purchasing power.