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Fei Protocol

5 min readAug 24, 2021

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By Fei Protocol on August 24, 2021

Welcome to the first issue of the Fei Newsletter, a community-sourced summary of all things in the Fei Ecosystem.

Here is what you can learn about in this issue:

The updated FEI stability mechanisms
Strategic partnerships and integrations since launch, with more to come
Fei Improvement Proposals (FIPs)
How to earn yield with your FEI and TRIBE
Community engagement opportunities

FEI is an algorithmic, reserve backed, community owned stablecoin

Fei Protocol is DeFi first, focusing on partnering with other DAOs and improving liquidity for decentralized platforms. This makes FEI a critical piece of infrastructure to minimize dependence on centralized exchanges and custodial tokens like USDC and USDT.

Fei Protocol uses its “Protocol Controlled Value” (PCV) as a reserve that upholds the FEI peg and a liquidity source to drive utility for FEI holders. The PCV is currently around $767M.

TRIBE holders collectively manage the PCV and deployments of FEI to maximize the value for the FEI ecosystem. FEI can be minted to provide liquidity in DeFi markets, as well as to earn yield in lending platforms. Risk management is embedded both within the DAO and smart contract algorithms to ensure that FEI and PCV deployments sustainably provide value while maintaining robust peg stability.

The integrations and upgrades that continue to be implemented are embedded in this vision, upcoming Fei v2 mechanisms will further advance the goal of a decentralized, scalable, and open financial system.

Removal of Direct Incentives

Direct Incentives (DIs) were intended to impose a deflationary tax on selling FEI based on the distance from the peg, as well as to reward actions which restored the peg.

The implementation of DIs on top of Uniswap v2 trades had a few undesirable drawbacks:

Breaking DEX aggregator integrations and oracles
Confusion for traders
Additional risk to holding FEI vs alternatives

Given the aggregate impact of these drawbacks, including a full ERC-20 compliance of FEI, the community decided to remove direct incentives and instead rely on regular reweights as the primary stabilization mechanism. Since the implementation of FIP-3 and FIP-4 on May 24, FEI has consistently maintained its peg.

Since the peg stabilized, the focus switched back to ecosystem integrations and growing FEI’s utility across DeFi. Captured below are some highlights:

Additional detail can be found at “History of Fei”, including a complete timeline of Fei Improvement Proposals (FIPs) and other protocol related activities. We are happy to say that the Tribe (community) participation is growing, and new FIPs are coming out weekly, ensuring that the Fei Protocol is flourishing and evolving.

THIS MONTH’S TOP STORIES

Fei is proud to announce new listings on four major exchanges:

As of August 11, 2021, TRIBE is available on CoinbasePro and Coinbase for TRIBE-USD trading pair.
As of August 24, 2021, TRIBE is available on Huobi Global for TRIBE/USDT, TRIBE/BTC trading pairs.
As of August 24, 2021, TRIBE is available on Binance for TRIBE/BTC, TRIBE/BNB, TRIBE/BUSD and TRIBE/USDT trading pairs. Sign up for a Binance account here.
As of August 25, 2021, TRIBE is available on Kucoin for TRIBE-USDT trading pair.

Passed FIPs:

Lending:

FIP-13a Light Lending Deployment Framework passed on-chain

With this proposal, $19M of FEI Lending Deployments went live, seeding markets with initial FEI liquidity. The various deployments were completed in one glorious transaction. FEI is the #1 stablecoin on Rari by TVL.

Protocol:

FIP-14b INDEX OTC passed on-chain

Fei Protocol now owns 100k INDEX (1% of total supply), which can be used for Metagovernance on tokens in the DPI, as well as strengthening the Fei — Index Coop partnership.

Bonding Curves:

FIP-14 Add DPI Bonding Curve passed on-chain

After implementation, the 1% discount on DPI filled up $10M in about 2 hours.

FIP-10a DAI Bonding Curve

We opened a bonding curve for DAI, with a target scale and cap of 50M FEI, at a discount of 0.3%. This will add ~49.85M DAI to the PCV, and release up to 50M FEI into circulation.

FIP-19 RAI Bonding Curve

We opened a bonding curve for RAI, with a target scale and cap of 6M FEI, at a discount of 0.3%. This will add about 2 million RAI to the PCV. The RAI would be allocated to the Rari Capital Fuse pool 9 and/or Aave.

Put FEI and TRIBE to work:

With the various new partnerships Fei Protocol established, FEI and TRIBE have a growing list of options for earning yield, and the TribalChief Staking Rewards Upgrade is coming in the next few weeks!

Here are some current yield opportunities:

FEI-TRIBE on app.fei.money
FEI only on Saddle
FEI-TRIBE compounding on Fei Tools
FEI-TRIBE compounding on Pickle
TRIBE only on Bancor
FEI or TRIBE only deposits on Rari

Community Events:

During the last few weeks, Joey, the founder of Fei, gave a presentation at ETHcc and participated in a panel during SmartCon. You can find the links to the recordings here:

ETHcc: An Overview on Algorithmic Stablecoins (June 21, 2021)
SmartCon Chainlink — The Future of Stablecoins (August 5, 2021) (will post link when available)

Upcoming Events:

The first Tribal Gathering community call on Discord will be held on Tuesday, August 31! More details to come!
Joey will be speaking at Mainnet 2021 in New York City September 19–21, 2021.
Brianna and Joey will speak at the B4Finance online conference. Register here. Day of the talk: 5th October 2021. Time of the talk: 8:25 AM PST

Crypto Twitter:

@BigSky highlights the power of PCV and FEI deployments:
https://twitter.com/bigsky_7/status/1423403051952521216?s=21

@Evan_ss6 breaks down some key developments and metrics for Fei:
https://twitter.com/Evan_ss6/status/1423679558004445200

Bruno Rodrigues (@cryptokailash) also seemed enthusiastic with current developments:

https://twitter.com/cryptokailash/status/1422520941247086592

Matt Graham (@Matthew_Graham_) acknowledges the team effort across multiple communities that went into implementing the DPI bonding curve:

https://twitter.com/Matthew_Graham_/status/1425076971940220928

We are proud of what our community has accomplished so far, and for what is to come!

THIS MONTH’S TOP STORIES

Passed FIPs:

Written by Fei Labs