Fei Protocol releases new governance proposal to utilize reserve assets for redeeming the stablecoin's imbalance.

According to ChainNews' previous report, Fei Protocol, a stablecoin project supported by numerous celebrity institutions, raised 639,000 ETH in a high-profile manner. However, due to an excessive supply in the Genesis Plan, the price of the FEI stablecoin failed to anchor with 1 USD as expected. Coupled with code issues, the development team had to temporarily suspend the incentive punishment mechanism. Nevertheless, the price of FEI still traded at a discount of over 20%.

Fei Protocol Latest Governance Proposal

According to previous reports, Fei Protocol, an algorithmic stablecoin project supported by many prominent institutions, raised a staggering 639,000 ETH. However, due to an excessive supply in the genesis plan, the stablecoin FEI failed to maintain its peg to 1 USD as expected. Additionally, issues with the code led the development team to temporarily halt the incentive penalty mechanism, yet the price of FEI still traded at a discount of over 20%.

To address the high selling pressure on Fei stablecoin, Fei Protocol founder Joey Santoro released agovernance proposal in the community today, outlining a plan to utilize PCV funds to buy back FEI from FEI holders. Currently, the FEI protocol holds approximately 2 billion FEI, with around 1.2 billion held by the protocol itself, and around 200 million locked in the TRIBE-FEI pool. This means there are approximately 800 million FEI circulating outside, with the PCV collateral valued at around 950 million USD, enough to buy back FEI at a 1 FEI:1 USD ratio.

However, the specific buyback ratio has not been decided yet. Joey Santoro mentioned that there are three options for TRIBE holders to choose from: buy back at 1 USD, buy back at a 0.9 USD discount, or not buy back at all. The proposal will initiate a governance vote on Snapshot tomorrow morning at 7 a.m.

If the proposal passes, the team will withdraw 75% of the PCV (approximately 350,000 ETH) and buy back FEI at the price determined by the market price of ETH and the community consensus (either 1 or 0.9). If the 75% of PCV is fully depleted, the community can propose to allocate more PCV in subsequent proposals.

Joey Santoro stated in the proposal:

"With this change, we believe the Tribe community will be able to establish a cultural tone for the Fei protocol with a flexible core mechanism. Consistent with the vision of PCV, the stability and utility of FEI have always been the top priorities."

However, Joey Santoro emphasized that TRIBE holders may be affected by this proposal. While aligning FEI with the one-dollar anchor aligns with the interests of TRIBE holders, the proposal also reduces the overall size of the PCV. Therefore, the community needs to consider devising other incentive mechanisms for TRIBE holders.