$1B Fei Stablecoins Rocky Start Is a Wake-Up Call for DeFi Investors

By CoinDesk5 days ago

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The $1 billion Fei Protocol stablecoin project has gotten off to a very rocky start.

The most important data point is this: Fei was built to maintain a 1:1 peg with the U.S. dollar but it has not quite hit the mark over this first week of its existence.

Backed by major VCs, Fei aimed to create a stablecoin protocol that would outright buy assets with its token, rather than holding them as collateral for loans. It appears the team underestimated the demand it would see to participate in the launch. It also seems clear that many of those who jumped into the project didnt understand Feis direct incentive method for stabilizing the price.

Related: State Street Aims to Start Cryptocurrency Trading in the Middle of 2021

FEIs struggles show that the launch of a new decentralized finance (DeFi) protocol is not a sure path to easy money, despite what many individual investors may have come to assume. The episode could be the tipping point where retail investors realize they have to be more judicious about hopping in, perhaps erring on the side of longer-term aims rather than the quick buck.

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