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Avalanche Executive, DAI, Defi Drama, EminGün Sirer, FEI, Fei Protocol, Manufacturer dao, nubits (USNBT), Origin Protocol, OUSD, Stablecoin, Stablecoin Market, Stablecoins, Tether, USDC
Fei, a new decentralized financial (defi) stablecoin project, has experienced some problems this week after its 1:1 USD token fell below its target price of 1 USD. The Fei project should be similar to Maker DAO’s algorithm DAI stablecoin, and it has the support of major venture capital companies.
On social media and forums, cryptocurrency advocates have been discussing an anti-defense project called Fei because the project lost contact with the U.S. dollar this week. Currently, the trading price of Fei Coin (FEI) is US$0.76 per unit, but the price is lower than the current exchange rate. Coingecko data shows that on April 7, 2021, a single FEI fell to a low market price of $0.73 per token.
-Bantg (@bantg) April 7, 2021
However, the bid for the Fei protocol reached $0.136, and cryptocurrency supporters started Say Regarding the situation. Avalanche Supervisor Emin Gün Sirer noticed that the coin had lost considerable value and discussed the concept extensively.
“FEI fell to $0.136. In the process, it should have taught everyone about stablecoin design and perhaps some experience in cryptocurrency investment,” Emin Gün Sirer Tweet. FEI / TRIBE is a two-currency algorithm stable currency, which is slightly different. This distortion has been flawed from the beginning, and it should be possible to predict that this kind of thinking will not work,” he added.
The founder and CEO of Xue Beng continued:
In a typical two-coin algorithm stablecoin, you have one coin, FEI, trying to maintain a fixed exchange rate, while the other coin is being used. [to] Absorb volatility. When the demand for coins is so high that it exceeds a fixed exchange rate, algorithmic stablecoins can work well: you only need to mint more FEI to reduce the price to a fixed exchange rate. The real challenge is what to do when demand is lagging and prices are low.
The biggest job of a stable currency is to maintain a pegged exchange rate system, otherwise, it may cause disaster to the market. In the spring of 2019, Bitcoin.com reported how the algorithmic stablecoin DAI is linked to pegs. Other popular stablecoins such as Tether (USDT) and USDC fluctuate, but depending on demand, they fluctuate by only a few cents.
In the past, other stablecoins failed. For example, investors suffered losses due to Bitcoin (USNBT). The token has been pegged to the U.S. dollar for a long time after its issuance, until June 9, 2016, when it was much lower than the U.S. dollar. Today, the so-called stable currency (USNBT) is only worth $0.22.
In the most recent time, in November 2020, Origin Protocol, the issuer of the OUSD stablecoin, suffered a brief loan attack, and the coin lost its exchange rate pegging mechanism. As of press time, Coingecko’s statistics show that the fully diluted valuation of fei (FEI) is approximately US$1.8 billion. Fei supporters and investors believe that the goal of $1 will be determined in time.
What do you think of the issue of Fei protocol stablecoins, and how does it decouple from the U.S. dollar? Let us know your thoughts on this topic in the comments section below.
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