The Fei protocol is a decentralized stablecoin project that implements innovative technological solutions to improve upon the concept of stablecoins, aiming to combine price stability with complete decentralization. FEI is the protocol's native decentralized stablecoin reflecting the US dollar price.
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Read on to learn everything you need to know about the Fei protocol and the FEI stablecoin.
What Is Fei USD Coin
Fei is a scalable, algorithmic stablecoin protocol that aims to provide a fully decentralized and efficient stablecoin not issued by a third party. To maintain the $1 peg, the protocol has developed a new price stability mechanism, Protocol Controlled Value (PCV). The Fei protocol's goal is to create a liquid market where FEI/ETH can be traded close to the ETH/USD pair.
FEI is the protocol's native stablecoin, close to the exchange rate of the US dollar. FEI’s peg is managed by the Fei protocol's PCV and direct incentives.
Fei protocol has a governance token, TRIBE, which allows the community to vote on proposals and upgrades.
FEI USD Coin Founders
Fei Labs was founded by Joey Santoro, Brianna Montgomery, and Sebastian Delgado in 2020 in San Francisco Bay Area. The team launched the protocol and the TRIBE DAO in March 2021.
Joey Santoro is the CEO of the company. He is specialized in computer science. Previously, Fei CEO worked as a software engineer at the identity management platform Okta and was co-president at Duke Blockchain Lab.
Brianna Montgomery is the business lead at FEI. Before founding FEI, she worked as the business lead at smart contract security and audit company ConsenSys Diligence.
Sebastian Delgado is a software engineer with experience in distributed systems and full-stack web development. Previously, he worked at Dharma Labs (acquired by OpenSea), a crypto wallet provider.
How Does Fei USD Work
The Fei protocol uses a two-token model - FEI stablecoin and TRIBE governance token. The FEI stablecoin can be used as collateral to borrow other crypto assets or make payments.
The protocol's "engine" is the Protocol Controlled Value (PCV) based on smart contracts. PCV is a categorization of Total Value Locked (TVL), which represents all the assets deposited in the protocol. It can be viewed as a DAO Treasury or insurance fund. Fei allocates assets in PCV algorithmically to provide liquidity and earn yield.
Crypto and stablecoin projects using the TVL model allow users to deposit assets and withdraw them whenever they want (excluding the blocking period). By depositing tokens, users get rewards, which means that the main factor for allocating capital to keep working is the token distribution.
Fei came up with a new solution. Unlike the described model, the protocol keeps the deposited funds. The main focus of Fei is maintaining the $1 peg by implementing several techniques. Fei has been building a FEI/ETH pool on the decentralized exchange Uniswap. FEI buys from and sells to the pool via smart contracts. In exchange for Ether deposits, the smart contract issues FEI stablecoins to the wallet that sent the ETH. When the FEI USD price drops below the peg, the protocol burns some of the FEI stablecoins to maintain the peg.
The highest price for the FEI stablecoin was $1,11, and the lowest price was $0,66. There is no max supply for FEI, as the stablecoin is issued on demand. As for the protocol's governance token, Tribe, it has a fixed maximum supply, which is 1 billion tokens.
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Initially, Fei used direct incentives, according to which trades away from the peg were penalized and trades towards the peg were rewarded. However, this method changed with the proposal for a new supply mechanism.
Fei released its major upgrade, Fei V2, on December 15, 2021. The protocol built an agreement with the DeFi liquidity provider Balancer Labs to manage risks, deploy liquidity, and earn yield with enhanced capital efficiency. Fei V2 presented new features such as algorithmic risk management and 1:1 redeemability for ETH and Dai. The Fei team announced carrying out a staged deployment to minimize technical risks. The final feature of the upgrade is algorithmic PCV management, which is expected to take place in Q1 2022.
Currently, Fei has 5 different system roles:
- Minter - creates FEI and adds coins to any address.
- Burner - burns FEI tokens.
- Controller - moves PCV in and out from their initial deposit.
- Governor - grants/revokes any role and presents the proposal for the discussion in DAO.
How to Buy Fei USD
Fei USD can be purchased on crypto exchanges Hoolgd, LBank, MXC, Gate.io, Uniswap, BKEX, Hoo, etc. To choose the platform that meets your investment needs, compare their security, liquidity, supported trading pairs, usability, etc. After selecting the exchange, you'll need to follow these steps:
- Sign up. Note that each crypto exchange has its requirements for registration and identity verification.
- Buy Bitcoin, USDT, or other crypto offered by the exchange to fund your account.
- Make a deposit.
- Purchase Fei USD through your funds.
