- FEI Labs has raised 639K Ethereum from over 17,000 contributors.
- Stable FEI turns unstable as the Genesis event ends.
- FEI users face unintended consequences and penalties.
FEI Labs has raised 639K Ethereum (approx. $1.3 billion) from over 17,000 contributors during the Genesis event to bootstrap FEI decentralized stablecoin. Specifically, the firm launched the event on March 31, 2021, and ended on April 3, 2021. However, as the Genesis event ended, the token experienced a market decline on its value.
Lets recap ➡️
— Fei Labs (@feiprotocol) April 3, 2021
Moreover, the participants will receive a pro-rata percentage of FEI from the bonding curve. More so, the funds will also be used to strengthen FEI’s Protocol Controlled Value (PCV). The FEI Protocol’s rise speculated as one of the biggest DeFi launches ever.
Meanwhile, FEI/ETH trading pair was the largest pool on Uniswap, a decentralized exchange. Even more, Uniswap itself reported total liquidity of $2.56 billion for the pair, indicating both tokens in the pool.
Simultaneously, retail investors got predictably rekt.
Here’s how the drama unfolded:
— Jon Wu (@jonwu_) April 4, 2021
FEI Users Face Unintended Consequences and Penalties
Many FEI investors and traders faced unintended consequences and penalties. Moreover, there are penalties for withdrawing liquidity during high selling pressure or when FEI trades below its peg. Currently, the FEI trades below its peg at $0.94, according to CoinGecko.
However, the FEI investors who rushed into the launch and airdrop want their Ethereum back now. Added to this, a burning fee will be charged for that cash-out. This indicates the stability mechanism design making users hold on to the tokens.
For those FEI traders and investors, there are only two options for those that provide ETH. Either hold the stablecoin and wait until it returns to its peg, or sell out and take the hit.
The protocol warned in a post-genesis announcement,
Expect some volatility in both FEI and TRIBE during the price discovery process. If FEI is trading below the peg, there is a burn applied to any selling on the FEI-ETH Uniswap pool.
All in all, FEI Protocol is also launching staking on April 5, 2021. Moreover, this should further increase holding the stablecoin and earning its governance token, TRIBE. Further to the staking, there will be a FEI/TRIBE liquidity pool on Uniswap.
According to CoinGecko, TRIBE was trading down 13.9% from its $2 peak, at the time of writing.