Joey Santoro, the creator of Fei Labs and a veteran of the Ethereum (ETH) network, has submitted a proposal to redeem FEI tokens for DAI and to distribute protocol-controlled value (PCV) among holders of TRIBE.
Mr. Santoro has moved to Twitter in order to make the announcement that the Fei (FEI) architecture would be shutting down as a result of “possible future regulatory problems,” as well as “technical and financial risks.”
He announced a plan to exchange the currently in circulation supply of FEI for Dai (DAI), which is the most widely used algorithmic stablecoin. The leftover PCV reserves will be redistributed among the holders of the TRIBE token, which was previously utilised as a balancing instrument to maintain a 1:1 peg between FEI and USD in the event that this proposal is approved.
Another reason for the impending suspension of business activities is the exhausting aftermath of a severe assault on Fuse-based liquidity pools affiliated with Fei Labs and its partners from Rari Capital.
As a last point of discussion, it should be mentioned that one other reason for Fei’s closure is that the PCV model could not find product market fit. The protocol had a difficult time making income since the returns in DeFi were low and the hazards were growing.
The compensation route for the victims of the hack described above is the component of Mr. Santoro’s recommendations that has generated the greatest controversy. Sam Kazemian, a prominent cryptocurrency entrepreneur and investor, did the math and determined that some of the impacted DAOs would lose 98% of their investments.
The FEI currency is no longer pegged to the US dollar. It reached a high of nearly $1.04 earlier today, August 20, 2022, but has since plummeted to $0.95 as of the time of this publication. FEI was one of the biggest decentralised stablecoins prior to the price decline; only DAI, FRAX, and MIM had greater capitalization. At the beginning of 2021, Fei Labs was successful in raising more than $1.4 billion in funding.