Fei released details of its planned decentralized stablecoin protocol yesterday afternoon.
Fei seeks to offer a novel design to combat some of the whale games that favored the earliest participants of decentralized stablecoins.
Fei’s stablecoin, FEI, is a “decentralized, fair, liquid, and scalable stablecoin that exhibits a high fidelity peg” said the announcement post. It utilizes bonding curves and direct incentives for peg maintenance, and will soon feature a governance token – TRIBE – offered exclusively through an Initial DeFi Offering on Uniswap.
Fei’s key innovation is the concept of ‘Protocol Controlled Value’ (PCV for short) or the premise that when users deposit ETH as collateral, it is owned and managed by the protocol – a sharp difference from other systems where liquidity can be removed at any time. Rather than selling FEI into the protocol’s bonding curve, holders can trade it elsewhere in the secondary market.
“PCV is any asset directly owned by the protocol.” Fei founder Joey Santoro told The Defiant “Like a subset of TVL with no IOU”
And why might DeFi need another stablecoin you ask?
“I was a dev in the ESD community and really inspired by the potential for decentralized stablecoins” added Santoro “However I felt ESD mechanisms incentivized whale games and volatility, and was upset at how little the LPs were incentivized and how quickly they left in contractions.”
Now, Fei will look to take matters into their own hands with a forthcoming launch in Q1. While it’s still early for the project, long-standing community members like Ric Burton have taken strong positions in supporting the project, showing that this stablecoin may be worth paying attention to in the coming months.