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18 April 2021

Fei Labs Raised $1.3 Billion for Decentralized Stablecoin—Now Some Investors are Stuck - Decrypt

Fei Labs Raised $1.3 Billion for Decentralized Stablecoin—Now Some Investors are Stuck - Decrypt


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The ‘Genesis’ launch of Fei Labs’s stablecoin protocol on Saturday raised 639,000 ETH, or $1.3 billion at the time of writing.

The difference is that its peg, which is called ‘PCV’, or ‘Protocol Controlled Value’, maintains the price balance by acting as an automated central bank, selling off and buying back tokens as needed to maintain its $1 price. .

To ensure that the protocol has the means to buy back the tokens, it requires some underlying assets, in this case cold hard ETH, as collateral.

Should demand for FEI fall and the price plummet, the ETH acquired from the launch will go towards buying back tokens to take the price of FEI back to $1. .

Put simply, the FEI protocol wasn’t built to anticipate the demand of its Genesis launch.

Investors likely piled into the protocol hoping for quick returns, only to find that the coin instantly depreciated in value, lumbering them with a coin trading far under its peg. .

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