[Company Watch] Fei Protocol, Quick Review Before its Launch
We have earlier in our Twitter posts explained briefly how to participate Fei Protocol’s launch. In essence:
1) You can deposit ETH to buy up to 100m $fei
2) Cost of $fei from $0.5 to $1.01, looks like $0.9 with naked eye estimate (see picture below)
3) No need to rush, everyone get the same price (within the cap of $100m)
(Amendments on 31 Mar: there’s no cap for funds to be raised in Genesis; so the discount you get for FEI of point 2 above depends on the total amount of funds raised; the price of TRIBE depends on the amount of FEI pre-swap for TRIBE. Please see the official playbook here.)
In addition, we are making a short summary here to explain the stabilisation mechanism of Fei:
- Fei is a stablecoin, pegged to $1
- Fei is collateralised by assets, currently ETH, from 100% of the ETH pooled during Genesis
- Anyone can mint Fei at the price of $1.01 on the bonding curve (contract)
- When Fei is below $1, there are two mechanisms to restore the value to $1
- When the price is below $0.98, sellers of Fei will be charged 4% and buyers will be rewarded 2%. Difference in fee is minted in Fei and added to the reserve.
- When the price significantly moves below $1, the protocol will withdraw most ETH-FEI liquidity from Uniswap, and sell some of the remaining ETH to FEI to restore the price of FEI to $1, and put the ETH-FEI liquidity back. Excess FEI not added back to Uniswap is burnt.
More details can be found in the official medium link: Introducing Fei Protocol.
For 4.b, when the protocol sets up the Uniswap ETH-FEI, it’s likely that it will mint additional FEI to pair the ETH received. Over time, FEI is burnt for stablisation purpose in 4.b. Some users may opt to convert FEI into TRIBE during Genesis, and this will affect the overall FEI supply. In any case, the supply of FEI does not affect the stabilization mechanism.
However, the stabilisation mechanism now is purely based on ETH collateral, and FEI is backed only by ETH. In the event that there’s a drastic drop of ETH value, FEI will become under collateralised. We foresee in the future there should be a basket of coins to back FEI.
The launch now is on 31 March and let’s see what will happen then.
(Serenity Team, 27 March 2021, Twitter: https://twitter.com/SerenityFund)