The Fei USD (FEI) is a stablecoin designed to provide Liquidity-as-a-Service (LaaS).
To explain, Liquidity-as-a-Service means providing cash to back stablecoins and other decentralized finance (DeFi) products. In particular, they intend Fei (FEI) to provide liquidity for decentralized autonomous organizations and DeFi platforms.
They claim FEI creates liquidity by algorithmically allocating assets through protocol controlled valued (PCV). They claim the PCV allows a tight peg between FEI and US dollars. A tight peg means you can redeem Fei for dollars fast.
FEI vs TRIBE (TRIBE)
The Fei Protocol tries to reduce risks by only holding decentralized assets and working with De-Fi native partnerships. Interestingly enough, holders of another token they call TRIBE (TRIBE) manage the PCV by providing it a community owned reserve.
CoinMarketCap listed Tribe (TRIBE) as the 241st largest cryptocurrency and a stablecoin on 23 November 2021. CoinMarketCap gave TRIBE a Coin Price of $1.13, a Market Cap of $514.045 million, a Fully Diluted Market Cap of $1.133 billionand a 24-Hour Market Volume of $11.96 million on 23 November 2021. They based those numbers on a Circulating Supply of 453.449 million TRIBE.
The Fei Protocol tries to reduce risks by only holding decentralized assets and working with De-Fi native partnerships. Interestingly enough, holders of another token they call TRIBE (TRIBE) manage the PCV by providing it a community owned reserve.
Can FEI make money from DAOs?
One of the primary uses for the Fei Protocol is providing liquidity for Decentralized Autonomous Organizations (DAOs). A DAO is a group organized by a smart contract on the blockchain.
Stakeholders control the DAO by owning tokens that give them the right to vote on various. DAOs try to maintain transparency and accountability by automatically recording members’ actions on the blockchain.
DAOs need liquidity because they organize many DAOs to finance specific projects or activities. For example, they organized the Constitution DAO to buy a copy of the US Constitution.
How FEI gives Liquidity to DAOs
There could be a market for Fei because DAOs are now big business. For example, ConsenSsy estimates the 20 largest DAOs held $6 billion worth of digital assets in August 2021.
Fei provides liquidity by integrating with Ondo Finance. Ondo allows uses users to split limited partnership (LP) assets into multiple investment classes. In addition, Ondo allows users to create programmable DeFi returns. Ondo allows users to choose between fixed and variable annual percentage yields (APYs). Hence, users can choose how much interest they could receive.
Uses of Fei
There is a Fei DAO that supplies FEI to lending markets on Rari Capital’s Fuse. They claim Fuse is the first truly open interest rate protocol. Rari claims Fuse allows users to lend, borrow, and create isolated lending markets.
They estimate the total value of funds supplied through Fuse was $1.399 billion on 20 November 2021. Moreover, Rari reports that the FeiRari (FEI DAO Pool) contained $180.193 million on 20 November 2021.
Hence, there is evidence that FEI provides liquidity and is being used. The Fei v2 upgrade provides liquidity by deploying PCV on Balancer.
They claim Fei v2 provides one-to-one redeemability by making all Fei tokens directly redeemable as PCV reserves. The hope is this will make Fei scale faster while staying decentralized.
Fei v2 manages volatility risks through a custom Balancer v2 Investment Pool. Balancer v2 is a liquidity management tool. Fei v2 rewards TRIBE for effective MCV management through buybacks and incentied risks management.
What Value Does Fei (FEI) have?
Mr. Market thinks Fei USD (FEI) offers some value. For example, CoinMarketCap gave Fei a Market Cap of $423.932 million, a Fully Diluted Market Cap of $425.515 million, a Total Locked value of $99.824 million and a 24-Hour Market Volume $114.448 million. CoinMarketCap gave Fei a Coin Price of 99.75₵.
They based those numbers on a Circulating Supply of 424.996 million FEI and a Total Supply of 426.116 Fei. CoinMarketCap named Fei the 164th most valuable cryptocurrency on 23 November 2021.
In contrast, CoinBase gave Fei a Market Cap of $424.5 million, a 24-Hour Market Volume of $114.4 million, and a Circulating Supply of 425 million FEI. CoinBase gave Fei a Coin Price of $1. However, CoinBase shows Fei is unstable because it had an all-time high Coin Price of $1.26.
I think Fei (FEI) is a viable cryptocurrency because it has some actual uses in finance. For example, they are using Fei for actual DeFi and using it to finance an increasingly popular variety of blockchain entity, namely DAOs. Hence, I consider Fei a stablecoin that speculators need to watch. I believe Fei has true value and Market Cap that could explode as DAOs become more popular.
Originally published at https://marketmadhouse.com on November 23, 2021.
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