Fei Protocol
Fei Stablecoin
A description of Fei USD


FEI (Fei USD) is designed to allow for flexible upgrades and arbitrary incentive mechanisms to support the $1 peg target.
Its issuance is controlled by the MinteršŸ’°role, and any contract with this role can mint FEI to any address. The BurneršŸ”„ role can burn FEI from any address, and is utilized for deflation and disincentives.


The FEI stablecoin is collateralized by a PCV reserve. Fei Protocol prioritizes liquidity when deploying this reserve to make sure users are able to trade FEI at high volume.
Critically, FEI can be over- or under-collateralized depending on volatility on the PCV and other market conditions.
The collateralization ratio of FEI at any time is calculated as follows, with the denominator being "User controlled FEI":
Collateralization ratio of Fei Protocol
The formula ignores "Protocol controlled FEI" because any FEI that the protocol holds will never be sold for PCV, only burned. Protocol controlled FEI can have second-order, short-term inflationary effects. For instance, FEI deposited into a lending market by Fei Protocol could increase the circulating supply when borrowed. The interest accrued and eventual withdrawal of that FEI ultimately have a net deflationary effect in the long term.
Last modified 5mo ago
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