Consultant with Bankless Consulting and Tokenomics DAO. Writer and Researcher for Web 3. Crypto Class of 2016
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Consultant with Bankless Consulting and Tokenomics DAO. Writer and Researcher for Web 3. Crypto Class of 2016
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Type of Stable Coin: Hybrid
Who’s behind the project: Fei was launched by “Fei Labs” and was converted into a DAO called “TRIBE DAO”
Reserve / Peg Mechanism: FEI is a decentralized scalable and Defi-Native stablecoin protocol built on the Ethereum block chain and ETH layer 2s; built by Defi for Defi. FEI is a 1 to $1 stable coin pegged to the US dollar providing redeemability for FEI using “protocol controlled value” (PCV). PCV is another way to say “treasury”, it is all the assets held by Fei Protocol. The aim of the FEI token is to propose a balance between the models of overcollateralized decentralized stable coins (like DAI) and centralized custodial stable coins (USDC, Tether). FEI uses the value it controls to maintain secondary markets and earn yield for the protocol through a variety of decentralized mechanisms.
FEI’s tokenomics is all about price stability and the protocols ability to maintain the price of FEI at $1, to accomplish this goal FEI uses three methods to backstop the peg:
Balancer and FUSE Algorithmic Investment Pool Management
1–1 Redeemability with PCV treasury
TRIBE Backstop
Algorithmic Investment Pool Management:
The higher the collateralization ratio goes the more risky and yield bearing positions can be taken by the treasury; the inverse is as the collateralization ratio gets closer to 100% the protocol reweights the treasury into stable assets and positions with little to no volatility. By being in stable assets it ensures FEI will maintain its peg and keep the protocol solvent. *You can see the current mix of PCV here: *https://app.fei.money/
Redeemability 1–1
You can exchange a FEI token for $1 of PCV, meaning if FEI is trading at $0.90 you can still burn that 1 FEI token back to the treasury for $1 of DAI, ETH, or other assets controlled by the protocol (below is a graph of Current asset mix of the Protocol Controlled Liquidity). This system ensures arbitrage will re-stabilize the peg based on the value proposition (you can make money burning fei below $1 for DAI or ETH).
TRIBE Backstop
Tribe backstop is a profit sharing and back stop mechanism for Fei; in V2 a mechanism was added that mints Tribe and is sold for Fei as soon as the collateralization rate drops below 100%. This mechanism is in addition to normal reserve stabilization that sells PCV for FEI when the Fei price dips below the threshold set by governance and offers another layer of protection.
In return for the added risk TRIBE holders face with this backstop method TRIBE would earn a percentage of the PCV equity (PCV value — user circulating FEI) each month via buybacks, as compensation for bearing the risk of inflation in the event of under collateralization. FEI would be minted to buy TRIBE off of the most liquid AMM (currently the FEI-TRIBE Uniswap V2 LP pool) and distribute back via staking rewards. A portion of this TRIBE would go back to the DAO treasury, which could be used to pay for development, liquidity incentives, or as a buffer against inflation.
The rationale behind using PCV equity is that TRIBE should only receive rewards for being overcollateralized, thus in turn incentivizing risk management and a longer time horizon.
Likewise only distributing a percentage as opposed to 100% of the equity will maintain a healthy PCV buffer to absorb volatility without inflating TRIBE.
For example, if the PCV equity is 500m and the distribution rate is 5%, then 25m FEI would be minted over the course of the year to buy TRIBE and distribute back to stakers
Reserve Assets / Mix:
Where can it be used:
FEI is currently a Ethereum based token operating on the ETG main chain, Polygon, and Optimism
Places to borrow or lend:
Uniswap
Curve
Saddle
Sushi
Aave
Fuse (Rari)
Compound
Balancer
Closing Comments:
FEI Protocol and TRIBE DAO had a rocky start, but thanks to the perseverance and ingenuity of the team and community the project has a promising future. Thanks to the new products like “liquidity as a service” and “Tribe Turbo” FEI’s PCV looks to continue to grow into the future as more DAOs and new token offerings begin to utilize these services and team up with FEI to build new liquidity pools and AMM pairs to create mutual value across the DeFi space. With the Tribal council and buyback features of TRIBE we could see a token with increasing value for years to come with TRIBE and a truly decentralized stable coin with FEI.
Type of Stable Coin: Hybrid
Who’s behind the project: Fei was launched by “Fei Labs” and was converted into a DAO called “TRIBE DAO”
Reserve / Peg Mechanism: FEI is a decentralized scalable and Defi-Native stablecoin protocol built on the Ethereum block chain and ETH layer 2s; built by Defi for Defi. FEI is a 1 to $1 stable coin pegged to the US dollar providing redeemability for FEI using “protocol controlled value” (PCV). PCV is another way to say “treasury”, it is all the assets held by Fei Protocol. The aim of the FEI token is to propose a balance between the models of overcollateralized decentralized stable coins (like DAI) and centralized custodial stable coins (USDC, Tether). FEI uses the value it controls to maintain secondary markets and earn yield for the protocol through a variety of decentralized mechanisms.
FEI’s tokenomics is all about price stability and the protocols ability to maintain the price of FEI at $1, to accomplish this goal FEI uses three methods to backstop the peg:
Balancer and FUSE Algorithmic Investment Pool Management
1–1 Redeemability with PCV treasury
TRIBE Backstop
Algorithmic Investment Pool Management:
The higher the collateralization ratio goes the more risky and yield bearing positions can be taken by the treasury; the inverse is as the collateralization ratio gets closer to 100% the protocol reweights the treasury into stable assets and positions with little to no volatility. By being in stable assets it ensures FEI will maintain its peg and keep the protocol solvent. *You can see the current mix of PCV here: *https://app.fei.money/
Redeemability 1–1
You can exchange a FEI token for $1 of PCV, meaning if FEI is trading at $0.90 you can still burn that 1 FEI token back to the treasury for $1 of DAI, ETH, or other assets controlled by the protocol (below is a graph of Current asset mix of the Protocol Controlled Liquidity). This system ensures arbitrage will re-stabilize the peg based on the value proposition (you can make money burning fei below $1 for DAI or ETH).
TRIBE Backstop
Tribe backstop is a profit sharing and back stop mechanism for Fei; in V2 a mechanism was added that mints Tribe and is sold for Fei as soon as the collateralization rate drops below 100%. This mechanism is in addition to normal reserve stabilization that sells PCV for FEI when the Fei price dips below the threshold set by governance and offers another layer of protection.
In return for the added risk TRIBE holders face with this backstop method TRIBE would earn a percentage of the PCV equity (PCV value — user circulating FEI) each month via buybacks, as compensation for bearing the risk of inflation in the event of under collateralization. FEI would be minted to buy TRIBE off of the most liquid AMM (currently the FEI-TRIBE Uniswap V2 LP pool) and distribute back via staking rewards. A portion of this TRIBE would go back to the DAO treasury, which could be used to pay for development, liquidity incentives, or as a buffer against inflation.
The rationale behind using PCV equity is that TRIBE should only receive rewards for being overcollateralized, thus in turn incentivizing risk management and a longer time horizon.
Likewise only distributing a percentage as opposed to 100% of the equity will maintain a healthy PCV buffer to absorb volatility without inflating TRIBE.
For example, if the PCV equity is 500m and the distribution rate is 5%, then 25m FEI would be minted over the course of the year to buy TRIBE and distribute back to stakers
Reserve Assets / Mix:
Where can it be used:
FEI is currently a Ethereum based token operating on the ETG main chain, Polygon, and Optimism
Places to borrow or lend:
Uniswap
Curve
Saddle
Sushi
Aave
Fuse (Rari)
Compound
Balancer
Closing Comments:
FEI Protocol and TRIBE DAO had a rocky start, but thanks to the perseverance and ingenuity of the team and community the project has a promising future. Thanks to the new products like “liquidity as a service” and “Tribe Turbo” FEI’s PCV looks to continue to grow into the future as more DAOs and new token offerings begin to utilize these services and team up with FEI to build new liquidity pools and AMM pairs to create mutual value across the DeFi space. With the Tribal council and buyback features of TRIBE we could see a token with increasing value for years to come with TRIBE and a truly decentralized stable coin with FEI.
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