1/15 THE FEI STABLE COIN AND HOW TO EVALUATE IT:
The Fei Stable Coin is launching on March 31 at 12:00PT and will last for three days, ending on April 3 at 12:00PT.
Below is a thread of everything you need to know and how to evaluate it.
The Fei Stable Coin is launching on March 31 at 12:00PT and will last for three days, ending on April 3 at 12:00PT.
Below is a thread of everything you need to know and how to evaluate it.
2/15 FEI is an algorithmic stable coin that uses game theory incentives to move the price of the token in the direction of a price target.
FEI token will be a stable coin pegged 1:1 to the dollar. A second token, TRIBE, will be responsible for the governance of the protocol.
FEI token will be a stable coin pegged 1:1 to the dollar. A second token, TRIBE, will be responsible for the governance of the protocol.
3/15 FEI derives its stability from a single vault where all the ETH used as collateral lays and which the protocol has control upon called PCV.
4/15 In order to expand the FEI supply, users deposit their ETH to the PCV and, in return, the protocol mints FEI that worth the same amount to the user (except in Genesis). That assures that in no circumstance the price of FEI will be above the peg.
5/15 The protocol has two mechanisms to contract the supply of FEI.
If a user decides to sell FEI to ETH (what would exacerbate the price decrease) he will incur in a 4% penalty fee applied in the token contract level. The opposite trade will be incentivized with a 2% bonus.
If a user decides to sell FEI to ETH (what would exacerbate the price decrease) he will incur in a 4% penalty fee applied in the token contract level. The opposite trade will be incentivized with a 2% bonus.
6/15 The difference between the upward bonus and the downward penalty is net deflationary, removing FEI out of circulation.
The second mechanism is a reweight in which the protocol uses its ETH in the PCV to push the price back to the peg.
The second mechanism is a reweight in which the protocol uses its ETH in the PCV to push the price back to the peg.
7/15 The first FEIs will be issued in a crowd sale event known as the Genesis. In Genesis all users will buy at the same time and the price for FEI will follow a bond curve.
The TVL will be the same as PCV and right after genesis will be the same as the value of ETH provided.
The TVL will be the same as PCV and right after genesis will be the same as the value of ETH provided.
8/15 As an additional incentive, participants of Genesis will receive 10% of TRIBE supply.
An IDO (Initial DEX Offer of TRIBE) will receive 20% of the TRIBE supply. User that participates in Genesis can choose to pre-swap any percentage of their FEI received for TRIBE.
An IDO (Initial DEX Offer of TRIBE) will receive 20% of the TRIBE supply. User that participates in Genesis can choose to pre-swap any percentage of their FEI received for TRIBE.
9/15 Using different TVL and % of FEI exchanged to TRIBE during Genesis is possible to calculate scenarios for MCAP and FDV and compare with other projects. An important distinction is that TVL is fully under protocol control and is a revenue-generating asset.
10/15 PCV will first be assigned to an Uniswap pool. The liquidity of this pool will be the double of PCV value, since PCV only represents the ETH value side. FEI side will be minted to take the price to the peg making the other side of the liquidity.
info.uniswap.org/pairs
info.uniswap.org/pairs
11/15 Estimating the fees generated between 5–15%, the scenarios for market cap above could also estimate an initial P/E.
12/15 One major advantage is that FEI will not be dependable on any fiat-backed stable coin as collateral and won’t be over-collateralized by crypto assets, making it much more capital efficient.
13/15 Another positive point of Fei is its governance minimizing approach for sustaining the peg.
The drawback is that Fei protocol is using a novel model of incentives to keep stability, so it remains to be seen whether it will succeed in practice.
The drawback is that Fei protocol is using a novel model of incentives to keep stability, so it remains to be seen whether it will succeed in practice.
14/15 FEI allows very widespread market forces like arbitrage and direct incentives drive the token price towards the dollar peg.
That way, FEI has the potential to build out a robust value proposition in a market where opportunities are immense.
That way, FEI has the potential to build out a robust value proposition in a market where opportunities are immense.
15/15 To read full report check:
yulesa.medium.com/the-fei-stable…
yulesa.medium.com/the-fei-stable…
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