The Fei Protocol acts to resolve existing limitations of these “stablecoins”, while offering the many benefits of price stability. This project has garnered significant attention thanks to its high degree of innovation and potential for success, with significant investors like Coinbase and a16z investing in the same round as nakamo.to.
Advanced Blockchain has invested into the Fei Protocol (https://fei.money/). The Fei Protocol offers a price-stable coin (or, “stablecoin”) that resolves existing issues such as the lack of true decentralization of these token types.
The Fei Protocol offers a novel solution to the stablecoin field.
Stablecoins are a popular and multi-beneficial concept in decentralized finance (DeFi) and blockchain. These digital tokens help to alleviate price volatility issues within the industry. This is helpful in lowering the risk and improving the utility of token ownership. Despite this important function, existing stablecoin models still exhibit a variety of limitations. A significant cause of the disadvantages of present stablecoins is that they tend to be collateralized by other cryptocurrencies. As a result, these solutions are not truly decentralized, instead being reliant upon third parties and centralized controls. Further, they suffer from scalability issues due to capital inefficiency resulting from overcollateralization.
The Fei Protocol was developed to resolve these existing issues. This project offers a fully decentralized model for a stablecoin with a price stabilization mechanism based on token demand and direct incentives. Unlike existing stablecoin options, the FEI stablecoin has an uncapped token supply, which tracks demand. New FEI enters circulation by sale along a bonding curve, approaching and fixed to a 1 USD peg. Users can purchase FEI from this curve, starting out with the option to purchase using ETH but expanding to any ERC20 token. The price function begins low in order to reward early token purchasers. Users do not sell FEI on the bonding curve. Instead, the incoming ETH is retained by the protocol as Protocol Controlled Value (PCV). The PCV creates a liquid secondary market where users can sell FEI back into ETH.
This ensures price stability via an incentivization model. A further benefit of the Fei Protocol is that no tokens issued by third parties such as USDC or USDT will be used as collateral on the bonding curve, in order to ensure full decentralization.
The strength of the Fei Protocol has been widely acknowledged by investors.
The present investment was made through Advanced Blockchain’s portfolio company, nakamo.to, in the same round as Coinbase and other prominent investors, in a united effort to support this promising new stablecoin project. With this investment into the Fei Protocol, Advanced Blockchain supports the development and use of an improved stablecoin model, that is positioned to price stability without compromising on decentralization. Thus, this investment helps Advanced Blockchain uphold its ultimate mission of promoting user-centric, cutting-edge blockchain solutions.
Additional information on Advanced Blockchain AG and its other investments can be found at www.advancedblockchain.com.