The new algorithm stable currency Fei Protocol will be launched soon.You must understand the triple risks

Note: The original author is Brianna Montgomery, co-founder of Fei Protocol.

FEI is a highly scalable, decentralized, and reserve-backed stablecoin designed to meet the needs of DeFi without relying on centralized asset collateral. As for the upcoming Fei Protocol founding stage, we hope that the community can decide whether to participate after being fully familiar with the working method of the protocol and the associated risks.

The Fei protocol uses direct incentives to penalize transactions that deviate from the anchor price and reward transactions that move closer to the anchor price. The result is deflation and thus helps to adjust the supply of FEI.

Direct Motivation is a powerful and amazing tool that you must deeply understand

The value of the Bored Ape NFT purchased by Justin Bieber in January has dropped to $74,382: Jinse Finance reported that Watcher.Guru tweeted that the value of the Bored Ape NFT purchased by Justin Bieber for $1.31 million in January has dropped to $74,382. to $74,382. [2022/11/17 13:17:14]

Direct incentives are a new mode of DeFi. For example, the Uniswap interface may display: the price of selling FEI is $0.98, but since this price deviates from the peg exchange rate, selling FEI at this time will burn an additional 4 % of the FEI stable currency, then the actual price after the transaction becomes $0.94. (Learn more: Uniswap Incentive Sell/Burn). Note that users cannot view the burned amount through the Uniswap interface, but when executing transactions, the burned part will be regarded as slippage. Therefore, Uniswap’s slippage parameter settings can indirectly prevent accidental large-scale burning. Once the protocol is live, participants can access the Fei protocol app’s trading interface‌ to determine any burns or rewards that may be imposed on their transactions.

The International Monetary Fund released the "Global Financial Stability Report": News on October 11. On the 11th local time, the International Monetary Fund released a new "Global Financial Stability Report", stating that since April 2022, global financial stability risks The balance of risks is clearly tilted to the downside. The report analyzes central bank policy responses to high inflation, risks of a disorderly tightening of financial conditions, and debt crises in emerging and frontier markets, explores how to close the climate financing gap in emerging markets and developing economies, and analyzes open Contribution of investment funds to asset market vulnerabilities. Central banks must act decisively to restore inflation to target levels, the report suggested. Some emerging market economies, which are grappling with a global tightening cycle, should reduce financial stability risks and maintain appropriate monetary policy transmission. Sovereign borrowers in developing economies and frontier markets should do more to contain the risks posed by high debt vulnerabilities. Policymakers should curb further buildup of financial vulnerabilities. (Golden Ten)[2022/10/12 10:31:25]

We recommend participants use the Fei protocol app to trade between the ETH-FEI asset pair to view the incentive amount.

US Poll: Positive views of Americans on business fall to 14-year low: Sept. 9 news, according to Capitol Hill, a Gallup poll released on Friday showed Americans' perceptions of business have plummeted. The survey found that 36% of Americans have a positive view of business, down from 45% before the pandemic. This is the lowest level since the Great Recession of 2008. The discontent appears to stem from record food, energy and property prices. Favorability of the grocery industry fell 14 percentage points from last year, the largest drop since the survey. Favorability towards the real estate sector fell 9 points, the second-largest drop. Only 22% of respondents expressed a positive view of the oil and gas industry, down from 28% last year. Twenty-nine percent of respondents said they had a positive view of the electric and natural gas business, down from 36 percent last year. (Golden Ten)[2022/9/9 13:20:12]

Note that the burning penalty can be quite severe. When the price of Fei deviates from the anchor price by 10%, selling Fei will result in a burning ratio of up to 100%. This means that if you want to sell FEI quickly during periods of high selling pressure, you There may be severe burning penalties, and the purpose of FEI's stabilization mechanism is to encourage long-term holding.

The Element market officially launched the Avalanche version: According to the official news of Element, at 20 o'clock on May 16, 2022, Beijing time, the Element market will officially launch the Avalanche version, providing ecological users with a variety of innovative NFT trading functions, and implementing "" 0 transaction fee".

It is reported that Element is the first NFT trading platform in the Avanche ecosystem to provide "bulk purchase", "collection quotation" and "asset notification" services.

Element Market, a one-stop multi-chain NFT trading platform, provides users with services from NFT retrieval to transaction. [2022/5/16 3:19:46]

In other respects, the direct incentives are only applicable to the specific Uniswap ETH-FEI trading pair, and the trading pairs and transfer behavior of all other exchanges behave as normal.

At launch, the Fei Protocol will only use ETH as a reserve currency. This design decision is made due to Fei Protocol's core purpose of decentralization. However, fluctuations in the price of ETH can lead to poor collateralization ratios.

The white paper discusses the conditions under which collateral ratios will continue to increase or decrease due to selling pressure. In short, if demand falls faster than the amount of burn captured by direct incentives, the Fei protocol will reduce staking during that time. By buying and burning FEI using Protocol Control Value (PCV), Reweights will step in to restore the price of Fei. In the event of a severe crisis, Fei DAO may need to step in to restore a healthy collateralization ratio by minting TRIBE tokens to burn FEI and recapitalize.

If this happens, Fei DAO can take measures to diversify PCV by connecting to the bonding curve of stable decentralized assets such as DAI and RAI. In addition, the Fei Protocol can also generate additional collateral buffer through Yearn and lending market investment yield-generating opportunities.

OpenZeppelin has completed a 12-man-week audit of the Fei protocol (OpenZeppelin Audit Report‌). The report mentioned that 5 serious problems and 3 high-risk problems were found, and Fei Labs officially stated that it has completed the repair.

Additionally, ConsenSys Diligence conducted a secondary audit of key contractual components of the Fei protocol (ConsenSys Diligence Audit Report‌)

According to Fei Labs, the team has made some changes to the protocol after receiving the audit report. These changes include switching from the staking contract written by the Fei core development team to the battle-tested Synthetix StakingRewards contract. Simplicity and security are important, and these changes are considered relatively low-risk, but are still reviewed by independent security engineers.

Nevertheless, the audit does not guarantee that the code is free of any bugs and vulnerabilities. Fei Labs officially stated that it will provide a bug bounty of up to one million dollars to encourage white hats to submit vulnerability reports.

In the event of a serious vulnerability report, the Guardian can suspend any risky contract without a time lock. After the suspension, any fixes and functional changes must be voted on and approved by the DAO. A few months after a successful launch and protocol stabilization, Guardian will transition to a community-held multi-signature wallet.

Tags：

SAND