FEI stands for a directly incentivized stablecoin that is undercollateralized and fully decentralized. The goal of the Fei protocol is to maintain a liquid market in which ETH/FEI trades closely with ETH/USD prices. FEI does this through a new stabilization mechanism called Direct Incentives. Directly incentivized stablecoins maintain pegs using dynamic mint rewards and burn penalties for DEX volume. FEI uses Uniswap as its incentivized DEX at launch. Governance can add and update DEX integrations and other incentives as needed.
The Fei Protocol vision was inspired by an ancient rai stone from Yap Island in Micronesia – the Rai or Fei. The FEI stablecoin has an uncapped supply that tracks demand. The Fei protocol is an ideal application for generalized PCV. The bonding curve and other incentives fund the PCV pool, which is roughly as large as FEI’s entire user circulation.
At the time of writing this article, Fei USDFEI is priced at $1.00 and has a total market capitalization of $509,295,994.
How Fei USDFEI works
FEI enters circulation through sales along the binding curve. This curve is close to and fixed at the $1 peg. When new demand for FEI arises, users can acquire it by purchasing on the binding curve. The price function will start low to reward early adopters who buy FEI. The Fei protocol will support the creation of any ERC20-denominated bonding curve. This release will contain only one ETH-denominated curve.
Fei Protocol will save the received ETH as Protocol Controlled Asset Value (PCV). Fei Protocol deploys PCV to create a liquid secondary market where users can sell FEI for ETH.
Fei Protocol designed the protocol-controlled asset value (PCV) model, which is actually a subset of the TVL concept. Essentially, it refers to the assets directly owned by the DeFi protocol that is completely “locked” in the DeFi protocol. In Fei Protocol’s view, PCV will allow DeFi protocols to have more flexibility to engage in non-profit activities and align with the project’s long-term goals.
Fei Protocol’s bonding curve and other incentives fund the PCV pool. The circulation of the pool is roughly equal to that of FEI’s all users. The Protocol allocates 100% of PCV funded by the ETH bonding curve to Uniswap pools in ETH/FEI (which in the future may be redistributed to other platforms). Uniswap holds the FEI required for this liquidity, paired with every FEI purchased by users on the bonding curve. Therefore, the depth of liquidity in this market should be commensurate with the total amount of remaining circulating FEI. This approach has two key advantages over the stability mechanisms supported by external liquidity:
Guaranteed liquidity — FEI holders can rest easy knowing that no big holders can withdraw from the liquidity the protocol has. It is funded by the bonding curve and stakes the Uniswap ETH/FEI pair.
Peg Reweighting — Fei Protocol can reweight Uniswap price back to the peg if it is below the peg for an extended period of time. It does this by performing the following atomic transactions: 1. withdraw all protocol-owned liquidity 2. buy FEI with the withdrawn ETH to increase the price 3. Replenish the remaining PCV as liquidity 4. Burn off excess FEI. Any goalie can trigger a peg reweighting when the price is low for a period of time. The protocol rewards breeders with FEI coinage incentives.
What is Fei USDFEI?
Fei Protocol supports the creation of a decentralized, scalable and fair stablecoin based on Ethereum. Its name is inspired by the famous rai stone (FEI) on the island of Yap - it is hoped that FEI will show the same stability, simplicity and universality as the rai stone.
Fei Protocol has several core components: Fei core (kernel), Fei stablecoin (stablecoin), bondingcurve(s), PCV Deposits, PCV Controllers, Fei Incentives, TRIBE governance token and DAO organization.
FEI is Fei Protocol's anchored stablecoin and follows the ERC-20 standard. The supply of FEI is unlimited, and the Minter and Burner contracts control its issuance through bonding curves and transaction incentives. FEI tokens have some non-standard ERC-20 functionality, but only for some transactions. Dynamic incentives will be given to the addresses that want to be incentivized. An incentive address is a specific contract address that Fei Protocol wants to incentivize for certain behaviours. The incentive contract controls the flow direction and amount of each incentive. The incentive contract is designated as Minter and burner. If users send FEI to an incentive address, their balance will be affected by the process of Minter or burner. The main incentive address of Fei Protocol is in the FEI/ETH pool on uniswap.
FEIp: Protocol-controlled FEI; deployed in LP pools or other pools controlled by different PCVs
FEIb: The FEI assigned by the bonding curve to the user; each bonding curve will calculate its own quantity
FEIu: User-controlled FEI; total supply FEI minus less FEI
FEI adopts a new stable realization mechanism of "direct incentive", which has higher capital efficiency, fair distribution, and complete decentralisation. The protocol uses the asset value controlled by the protocol to maintain the liquidity of the secondary market and realize FEI's Peg issuance and value stability. The Fei Protocol can even be balanced in the governance token of the integrated platform. It can use these tokens to contribute to the governance process of the entire ecosystem.
Fei USDFEI Crypto Wallet
In addition to placing FEI in the Gate.io exchange to facilitate trading, FEI can also be placed in the crypto wallet.
There are two schools of thought in determining the price of Fei USD.
By way of intrinsic value: This typically involves on-chain metrics, project metrics and financial metrics of Fei USD, collectively known as fundamental analysis. The law of supply and demand, tokenomics, use case, project roadmap as well as regulations and governance involved would affect the value of Fei USD from a long term perspective.
By way of price action: Primarily analyzed via candlestick chart patterns and technical indicators such as MACD, RSI and the bollinger bands, technical analysis forecasts the price of Fei USD on the basis that history tends to repeat itself. As the candlestick charts are a general representation of the emotion of the market, news announcements and community sentiment can be significant price action drivers for Fei USD as well.
HODLers tend to prefer the long term nature of fundamental analysis, whereas short term traders tend to rely on technical analysis more. In reality, both analyses may combine and create interesting scenarios for Fei USD and the cryptocurrency market as a whole.
2. What is the highest price of Fei USD in history?
Fei USD achieved the all-time high of $1.11 in 2021-05-19, and is currently trading at $0.98.
3. What is the lowest price of Fei USD in history?
In 2021-04-18, Fei USD reached the all-time low of $0.67.
4. Should I buy Fei USD now?
It is important to remember that Fei USD, like all other cryptocurrencies, are subject to extreme market conditions, legal policies, project team management and other unpredictable factors. As such, cryptocurrencies fluctuate greatly and it is important to manage your own risk level. Users are advised to do your own research when making investment decisions in the crypto market.