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EP 50: $FEI, What Went Wrong? An Economics Explanation

By Darren

Reading Time: < 1 minute
EP 50: $FEI, What Went Wrong? An Economics Explanation
EP 50: $FEI, What Went Wrong? An Economics Explanation

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FEI protocol had all of Twitter talking last week. Backed by significant VCs, this new algorithmic stablecoin mechanism, $FEI, managed to raise US$1 billion worth of Ether within the first 24 hours. And within 24 hours of launch, the price of $FEI dropped significantly, as did $TRIBE, the governance token.

So what went wrong? How did the economics model and incentive design fail so terribly? And what was the tipping point that caused this massive disaster? Today, we analyse the lessons to learn from $FEI, this new mechanism to create an algorithmic stablecoin.

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