FEI Briefing Document
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-- PRE-CALL CHECKLIST ---
General Discovery
Researched by: Joe_King
About the event
- Project: Fei Protocol / TRIBE DAO
- Guests: Joey Santoro
- Topic: Joeyâs journey in Web 3
- Event schedule:
- NOT FINANCIAL ADVICE
About our guest speaker
- Joey SAN-TORO
Write a short bio about the guest(s) including their role at the project they are speaking about.
- Joey started in Blockchain during his college years in DUKE university, he was the co-president of the DUKE Blockchain lab
- Joey started as a neuro science major at DUKE and then switched to computer science. He was interested in blockchain technology and began learning all he could while in school which led him to being a research assistant in the blockchain lab. He graduated in 2019 with a CS degree and went to work for âOkta Incâ which was working on helping businesses integrate and manage digital identity.
- First project Joey worked on was âEmpty Set Dollarâ
- Joeyâs first project âempty set dollarâ was an algorithmic stable coin, the project rebranded to âEmpty Setâ after the price collapsed and Joey left the project team. This led Joey to go and create FEI where he applied the knowledge and lessons learned from the Empty Set Dollar project.
- Joey started FEI and TRIBE DAO which recently merged with Rari Capital (the largest merger in DAO history). (the merger was covered by Bankless HQ and Joey has been on the HQ podcast with the Rari founder (link in the references).
About the project
- What is the general positioning of the project? i.e. DeFi, NFTs, DAOs, governance.
Fei is an algorithmic stable coin that aims to be used for liquidity for Defi, DAOs, and new protocol to bootstrap liquidity.
- What is the value proposition of the project? How does it clearly differentiate itself from others in the web3 space?
FEI is not a normal stable coin that aims to be used by retail traders, this is meant for large projects that need liquidity. Fei merged with Rari to create a âkiller appâ for new protocols and DAOs to boot strap liquidity through the product they call âTribe Turboâ and âTribe Launchâ
- How does it benefit it community members and general web3 communities at large?
When a new DAO wants to get liquidity for itâs token they can apply to TRIBE LAUNCH and get a 0% interest loan from FEI to provide liquidity via a FUSE pool, then the new DAO and TRIBE DAO split the fees and eventually pay back the FEI loan. This allows a new DAO to have liquidity without having to sell a ton of itâs native token and gives users the ability to swap, lend, and borrow from the FUSE pool.
- Is it bridging blockchains, protocols, tools, communities, etc.?
It is bridging communities by providing liquidity to DAOs and bringing them together with TRIBE DAO, creates an instant DAO to DAO connection.
- Does it bring a unique vision or approach to solve challenges in web3?
FEIâs stable coin peg is a unique blend of approaches: In itâs essence V2 has created three ways for FEI to maintain itâs $1 peg and uses them in cascading order:
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Balancer V2 Investment Pool management
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1-1 Redeemability of FEI with PCV (protocol controlled liquidity)
controlled by the TRIBE DAO
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TRIBE Backstop
- How does it improve the web3 ecosystem?
A stable coin that is decentralized and DeFi Native
- Generally, how does the product work?
¡     On 12/15/2021 Fei V2 went live with a large number of upgrades and updates that were created by the learned experience of the failures and solutions to the issues faced in version one. Two major pieces make up the shift to V2:
¡     Tribal Council is a profit sharing and back stop mechanism for Fei; in V2 a mechanism was added that mints tribe and is sold for Fei as soon as the collateralization rate drops below 100%. This mechanism is similar to normal reserve stabilization that sells PCV for FEI when the Fei price dips below the threshold set by governance.
¡     In return for the added risk TRIBE holders face with this backstop method TRIBE would earn a percentage of the PCV equity (PCV value - user circulating FEI) each year via buybacks, as compensation for bearing the risk of inflation in the event of under collateralization. FEI would be minted to buy TRIBE off of the most liquid AMM (currently the FEI-TRIBE Uniswap V2 LP pool) and distribute back via staking rewards. A portion of this TRIBE would go back to the DAO treasury, which could be used to pay for development, liquidity incentives, or as a buffer against inflation.
¡     The rationale behind using PCV equity is that TRIBE should only receive rewards for being overcollateralized, thus in turn incentivizing risk management and a longer time horizon. This feature would require a manipulation resistant collateralization ratio oracle on-chain.
¡     Likewise only distributing a percentage as opposed to 100% of the equity will maintain a healthy PCV buffer to absorb volatility without inflating TRIBE.
¡     For example, if the PCV equity is 500m and the distribution rate is 5%, then 25m FEI would be minted over the course of the year to buy TRIBE and distribute back to stakers.
¡     Algorithmic PCV management allows Fei to use the underlying assets in the PCV to be lent out to earn yield increasing the underlying PCV and the price of TRIBE through a buy back mechanism. Fei is controlling the risk of lending activities by allocating more of its assets to stable ones like DAI as the collateralization ratio approaches 100%. Fei does this automatically using Balancerâs Investment pool.
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¡     By allocating to stable assets as it approaches 100% Fei ensures the protocol will not be insolvent and the peg will not be lost.
¡     By introducing the explicit relationship of TRIBE absorbing PCV volatility, TRIBE becomes effectively levered on PCV depending on how much FEI there is in circulation. To take some extreme examples, if there are no circulating FEI then TRIBE would simply earn rewards from the entire PCV in perpetuity. If there was exactly as much user FEI in circulation as PCV, then TRIBE has no rewards and small movements in PCV have a large impact on PCV equity.
- Practical applications of product.
- Any recent, meaningful updates to the project: TRIBE TURBO
- Roadmap/future applications
Team just launched TRIBE TURBO and TRIBE LAUNCH is coming next, they are onboarding projects and DAOs to build out this new innovative system.
About the ecosystem
- Find one or two things the speaker has shared in the past about the future growth, impact of web3? Ă
FEI is not currently looking to go multi chain, FEI is a protocol for DAOs, not trying to compete with DAI and USDC in terms of retail users. Not as useful as DAI. FEI is targeting DAOs and standing on ETH and staying L1.
PCV is the goal, (can you think of it as a fund and FEI outstanding as a bond, and Tribe is the shares in the fund, excess captured by the tribe holders). Tribe holders are incentivized to grow PCV and grow FEI, tribe holders earn yield on the whole PCV.
- How will their project(s) contribute to the evolution and adoption of web3? Ă providing a defi native stable coin that can be used to help new DAOs and projects get started without spending large amounts on liquidity incentives
- What are some web3 projects/tools that the project integrates to create a more robust ecosystem? Ă Rari, FUSE pools, Ondo Finance, and Balancer
Resources
References
Sources
- https://researchblog.duke.edu/2022/02/21/2019-duke-grad-founds-cryptocurrency-startup-fei-protocol/Social media details of the guest.
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