Algorithmic stablecoin protocol Fei ushered in a reversal article to understand how V2 reborn TRIBE

Today, after Binance and Huobi successively announced the listing of TRIBE governance tokens, the algorithmic stablecoin protocol Fei protocol finally came out of the haze of pain.

At the beginning of April of this year, Fei attracted the attention of the crypto market because of its $19 million financing from top institutions such as A16Z and Coinbase. Subsequently, the initial issuance stage of the project sucked about 639,000 ETH , but such a large-scale financing This triggered the subsequent stampede of Fei and its governance token TRIBE.

The “burn” mechanism originally designed by Fei also made the participants miserable, and investors were forced to sit in a “water prison” for a month.

After the Fei community voted to convert part of the PCV funds (ETH) of the agreement into other stable currencies (such as DAI, USDC , RAI), Fei (from the end of May) has stabilized its stable currency exchange rate very well. Brought some confidence to the participants.

Algorithmic stablecoin protocol Fei ushered in a reversal article to understand how V2 reborn TRIBE

As an investor of Fei protocol, Coinbase suddenly announced the launch of its governance token TRIBE in early August. This news stimulated the market price of TRIBE in the short-term, but the scale of Fei’s stablecoin did not increase due to this, so After that, we saw the price of TRIBE governance tokens fall.

Algorithmic stablecoin protocol Fei ushered in a reversal article to understand how V2 reborn TRIBE

So, in addition to the progress of the exchange, what other aspects of Fei protocol deserve our attention?

It is reported that Fei protocol founder Joey also announced today the overall design of Fei V2, the most important of which is to strengthen the relationship between FEI and the governance token TRIBE.

Note: To deploy the V2 mechanism, governance approval must be passed.

In general, the core principles of Fei V2 are:

  1. Enhance PCV management capabilities;
  2. Strengthen the relationship between FEI and the governance token TRIBE;
  3. Backward compatibility with V1;
  4. Simple risk minimization design;

It is reported that Fei V2 will be launched in multiple stages to minimize the risk of introducing too many new mechanisms at once, and to adapt to the development and audit schedule.

The first phase of 2021 Q4: Tribal Committee (profit sharing)

In Fei V1, the governance token TRIBE is not directly related to the success of Fei or PCV management. V2 aims to directly link TRIBE and PCV’s performance through TRIBE repurchase and inflation.

V2 will add a mechanism that once the mortgage rate falls below 100% or the governance configurable threshold, TRIBE will be minted and sold into FEI. This mechanism is similar to a normal reserve stabilizer. When the FEI price is lower than a certain threshold, they will sell PCV to FEI. The difference is that the mortgage rate needs to be checked additionally.

TRIBE will earn a certain percentage of PCV equity (PCV value-user’s circulating FEI) through repurchase every year to compensate for the inflation risk in the case of insufficient mortgage. FEI will be minted to purchase TRIBE from the most liquid AMM (currently FEI-TRIBE Uniswap V2 LP pool) and distribute it to pledgers through pledge rewards. Part of the TRIBE will be returned to the DAO vault, which can be used for payment development, liquidity incentives or as a buffer against inflation.

For example, if the PCV equity is US$500 million and the distribution rate is 5%, then 25 million FEI will be minted in a year to purchase TRIBE and distributed to the pledger.

Phase 2 Q1 2022: Algorithmic PCV Management

One of the most important aspects of Fei Protocol is the management of PCV. The PCV is a reserve used to support the value of FEI and provide utility for it through liquidity provision and other integration.

Fei V2 will continue to benefit from various PCV deployments in the entire DeFi ecosystem. An important addition to PCV will be the Balancer V2 investment pool, which can:

  1. Provide liquidity for multiple tokens at the same time;
  2. Automatically rebalance to the priority asset allocation (and earn fees in the process);
  3. Re-mortgage tokens through the asset manager to improve capital efficiency;
  4. It is possible to get BAL rewards;

Similarly, there will be some BalancerV2 stable pools optimized for the liquidity of FEI stablecoins, which benefit from the Balancer V2 architecture optimized for gas and the combinability with investment pools.

Fei DAO will be fully responsible for the asset allocation between tokens, which means that DAO can change parameters such as transaction fees and weights.

And TRIBE can effectively use PCV according to the number of FEIs in circulation. To give some extreme examples, if there is no FEI in circulation, then TRIBE will always get rewards from the entire PCV. If the value of the user’s FEI in circulation is as much as the PCV, then TRIBE will not be rewarded.

The project party will automatically adjust the composition of the PCV based on the effective leverage factor. For example, if the leverage is high, PCV can convert more assets into stable assets by increasing the weight of stable assets in the Balancer pool.

This treats PCV as a huge MakerDAO vault, in which TRIBE holders control the algorithm knob to rebalance the PCV according to market conditions.

In general, Fei protocol and its governance token TRIBE ushered in a new life. As for the future, they still need to be further verified by the market.


Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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