A new decentralized (final) financial project called Fei ran into trouble this week after the $1:$1 exchange rate fell well below its $1 target. The Fei project was to be similar to the algorithmic stabilizer Maker DAO and was backed by large venture capital firms.
Fei log market price drops to $0.73 and Fei stablecoin is trading at $0.136
Proponents of cryptocurrency on social media and forums are discussing Defy’s project called Fei after it lost its peg to the US dollar this week. Shares of One Fey (FEI) are currently changing hands at $0.76 per share. Data from Coingecko shows that the individual RDI index for 7. April 2021 has fallen to a market price of $0.73 per token.
1 FEI = $0.136, @rleshner has lost 80% of his bullish buying rate. I think we’ve realized that big names mean nothing pic.twitter.com/xGiwKquUUON
– banteg (@bantg) April 7, 2021
However, the price of the Faye protocol reached $0.136, and advocates of crypto-currency began to talk about the situation. The CEO of Avalanche, Emin Gun Sirer, saw that the coin had lost a lot of value and talked a lot about the concept.
FEI dropped to $0.136. In the process, he had to teach everyone a few lessons about candy design and maybe crypto investing, tweeted Emin Kyung Sirer. FEI/TRIBE is a double-tapered algorithm with a twist. The bounce was flawed from the start, and you could have predicted the idea wouldn’t work, he added.
Avalanche’s founder and CEO continued:
In a typical algorithm with two stable coins, one coin, RDI, tries to maintain an anchor while the other is used [to absorb volatility]. Algorithmic stalls work very well when the demand for a part is high enough to be above the reference value: They just mint more RDIs to drive up the price. The real problem is what to do when demand is low and price is low.
Not the first barn to drop the pin
The barn’s biggest job is to keep the band alive, and if it fails to do so, it could spell disaster for the market. In the spring of 2019, Bitcoin.com reported how the algorithmic stabilizer DAI was having problems with its tethering. Other popular stablemates like Tether (USDT) and USDC fluctuate, but only by a few cents, higher or lower, depending on demand.
There have been other barn failures in the past, such as when investors lost money with Nubits (USNBT). The flagship stayed on the dollar for some time after launch, until the 9th. June 2016 fell well below the dollar mark. The so-called stables (USNBT) are now only $0.22 each.
Most recently, OUSD bond issuer Origin Protocol suffered a credit blitz in November 2020, causing the currency to lose its bond. Currently, Coingecko’s statistics show that Fey (FEI) has a fully diluted valuation of approximately $1.8 billion. Fei’s supporters and investors are confident that the one dollar target will be met in time.
What do you think about the problems with the Fei stablecoin protocol and how it has found its footing in USD? Let us know what you think in the comments below.
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