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19 April 2021

VC Backed Billion-Dollar Stablecoin Project Fei Protocol Falls Below the USD Peg – Bitcoin News

VC Backed Billion-Dollar Stablecoin Project Fei Protocol Falls Below the USD Peg – Bitcoin News


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On social media and forums, crypto advocates have been discussing the defi project called Fei after it lost its peg with the U.S.

In a typical two-coin algorithmic stablecoin, you have one coin, FEI, trying to maintain the peg, while the other one is used [to] absorb the volatility.

Algorithmic stablecoins work very well when the demand for the coin is so high to be over the peg: you just mint more FEI to bring the price down to the peg.

There have been other stablecoin failures in the past like when investors lost money with nubits (USNBT).

In more recent times, in November 2020, the OUSD stablecoin issuer, Origin Protocol suffered from a flash loan attack and the coin lost its peg.

What do you think about the issues with the Fei protocol stablecoin and how it lost its peg with the USD.

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