1. Overview

• Stablecoin: FEI

• Issuer: Fei Protocol DAO, backed by the governance token TRIBE

• Blockchain: Ethereum (ERC‑20)

• Launch: April 2021 (v1) with major update in October 2021 (v2)

• Type: Algorithmic / over-collateralized hybrid, backed by DAI for peg stability

2. Use Case

FEI is designed primarily to serve DeFi ecosystems by:

• Providing a permissionless, on-chain USD-pegged token

• Supporting use in liquidity pools, borrowing, lending, and payments

• Enabling DAO-controlled treasury strategies via PCV (Protocol-Controlled Value)

• Offering capital-efficient issuance compared to fully collateralized stablecoins

3. Governance & Compliance

• Managed by the Fei Protocol DAO, which governs treasury and protocol parameters

• No formal regulation or licensing, operates as a decentralized protocol

• Audited by firms including Consensys Diligence v1 & v2, with identified issues addressed

• Core components include a Guardian Multisig and bonding curve updates for peg enforcement

4. Customer Feedback & Reputation

• No Trustpilot or mainstream reviews — product is DeFi-native only

• Mixed reception: praised for its capital efficiency and unique PCV design, yet flagged as complex and fragileduring volatility

• Audit transparency appreciated, but community warns of risks tied to market stress (WakeForest Law Review)

5. CU Background Check

• Founders include Joey Santoro, Brianna Montgomery, and Sebastian Delgado

• Raised $19M in March 2021 from a16z, Coinbase Ventures, Framework Ventures (Messari)

• Transitioned to v2 in October 2021 after initial peg crash to $0.71, introducing redeemability via PCV and TRIBE backstop

• Still fully decentralized; no bank partners or institutional licensing

6. Crypto-Economics

• Minted via ETH/DAI deposits on a bonding curve, with PCV earning yields

• Peg defended through DAI-backed redemption and arbitrage

• PCV holds ETH and stablecoins, auto-managed via AMOs

• Uses incentives: users arbitrage peg via Uniswap FEI/ETH pool and bond redemptions

• TVL and market cap around $3–$4M, with ~3.4M FEI circulating

7. Backing & Value Stability

• Backed indirectly by DAI for peg support; PCV evolution makes FEI redeemable 1:1

• Initial model failed; v2 introduced strong backing, TRIBE backstop, and redemption mechanics

• Vulnerable to oracle failures, extreme market stress, and liquidity shortages

• Academic critique labels algorithmic models (like FEI) inherently fragile and risky

8. Final CyberFinance Compliance Rating

⚠️ Final Rating: ORANGE–RED SIGNAL

📌 Ratex42 Summary

FEI is an innovative algorithmic stablecoin featuring a hybrid model with DAI backing and PCV—a new capital-efficient approach to stable value. However, its history of de-pegs, reliance on volatile collateral and governance mechanisms, and governance complexity make it a high-risk asset. Suitable only for advanced DeFi users with tolerance for structural instabilities; not recommended for institutional or conservative allocations.