About Fei Protocol (FEI)
Fei Protocol (FEI) introduce Fei Protocol and the FEI stablecoin. The goal of the Fei Protocol is to maintain a liquid market in which ETH/FEI trades closely to the ETH/USD price. FEI achieves this via a new stability mechanism known as direct incentives. Direct incentive stablecoins use dynamic mint rewards and burn penalties on DEX trade volume to maintain the peg. FEI uses Uniswap as its incentivized DEX at launch. Governance can add and update DEX integrations and other incentives as needed.
Fei Protocol (FEI) New supply of FEI enters circulation via a buy-only bonding curve denominated in ETH. The refer to the ETH accrued from purchases on the bonding curve as Protocol Controlled Value (PCV). The define PCV as any value which is completely owned and controlled by the protocol, without an IOU. It is a subset of Total Value Locked with a stronger use case. The Fei Protocol deploys its PCV exclusively as Uniswap ETH/FEI liquidity at the genesis of the protocol.
Fei Protocol (FEI) This is a “liquidity-collateralized” model which removes the need for an overcollateralized debt position. As the supply grows, the bonding curve price approaches a fixed peg to the oracle price. The fixed peg bonding curve creates a guaranteed arbitrage opportunity when the Uniswap price trades above the peg. The protocol will use its liquidity PCV to backstop the Uniswap price when it trades below the peg for a certain period.
Fei Protocol (FEI) governance token is used to upgrade the protocol over time. Fei Protocol releases TRIBE to bonded FEI/TRIBE Uniswap LP tokens. The Fei Protocol design has key advantages that are not present in other widely used stablecoin designs. FEI is decentralized and scalable. New supply is fairly distributed to new demand. PCV provides flexibility to governance to add future integrations and incentives. FEI holders benefit from the mechanisms designed to create a high fidelity peg and liquid
Fei Protocol (FEI) Storage Key Points
|Coin Name||Fei Protocol|
|Circulating Supply||2.04B FEI|
|Source Code||Click Here To View source code|
|Explorers||Click Here To View Explorers|
|Twitter Page||Click Here To Visit Twitter Group|
|Whitepaper||Click Here To View|
|Official Project Website||Click Here To Visit Project Website|
Direct Incentive Stable Coin
Fei Protocol (FEI) direct incentive approach presents a promising improvement over existing stable coin models, which fall into three broad categories: fiat-collateralized, crypto-collateralized, and non-collateralized. Fiat-collateralized stable coins, such as USDC and USDT, are issued by centralized entities
Protocol Controlled Value
In most DeFi applications, users deposit funds with an IOU attached. For example, users could be issued tokens representing the pro rata percentage of the supplied assets. These assets are a part of the Total Value Locked (TVL). The protocol would define a utility around how these funds are deployed. The contract may offer incentives to keepers to close unhealthy positions. There may even be some fee which accrues to stakeholders or a reserve. This value does not belong to the protocol in any meaningful sense, but rather to the users and owners of the protocol.
Fei Protocol Design
Fei Protocol (FEI) As seen below, the system has several core components: Fei Core, the FEI stablecoin, bonding curve(s), PCV Deposits, PCV Controllers, FEI Incentives, and the TRIBE governance token and DAO
FEI is the pegged stable coin produced by Fei Protocol, following the ERC-20 standard. Its supply is uncapped. Minter and Burner contracts control its issuance, via bonding curves and trading incentives. The FEI token exhibits certain non-standard ERC-20 functionality, but only on a subset of transactions. There are dynamic incentives overlaid on transfers involving incentivized addresses. An incentivized address is a contract that Fei Protocol wants to incentivize certain FEI behavior.
Fei Protocol (FEI)PCV Deposits are the recipients of PCV, funded by bonding curves. Because FEI cannot sell on these curves, it is crucial to create a liquid market that allows for the sale of FEI. The sale price should track the peg. The Fei Protocol will allocate all initial PCV to a Uniswap liquidity pool denominated in FEI and ETH. The concept extends to other token types assuming access to an oracle price to peg to. In this case, the PCV Deposit uses the ETH/USDC TWAP as the oracle. We will now explore the Uniswap PCV Deposit in depth
Fei Protocol (FEI) discuss the mechanics of the FEI incentive contracts in the FEI token section. This section focuses on the way that incentive contracts help maintain the peg. There will be a single initial incentivized Uniswap pool, ETH/FEI. If the price is below the peg, the incentive contract will offer a FEI mint to traders. The next trader to buy FEI on the pool will receive the mint as an incentive for helping return towards the peg. This incentive will take into account the time-weighted magnitude of the distance from the peg.