The post-genesis state of the Fei protocol

After the Fei protocol fell short of expectations in early April, much ink has been spilled on the doomed design of the FEI stablecoin and its possible ways to recover. Covalent’s latest findings in Cointelegraph Consulting’s bi-weekly newsletter complement the discussion by taking a closer look at how the post-genesis drama of the Fei Protocol unfolded, using the numbers.

Three weeks ago, the Fei protocol raised 639,000 Ether (ETH) worth approximately $ 1.3 billion at the end of the Genesis event. The data shows that the event attracted 17,567 unique users, but it turned out to be heavily dominated by whales. Indeed, 241 addresses, each with more than $ 1 million, collectively contributed 63% of the total ETH Genesis value.

Retail investors who have $ 500– $ 5,000 in their wallets represent the largest group in terms of the number of contributors, accounting for 43% of the contributors, but only 1.24% of the contributions. The third largest group by contributor count had 2,667 investors, who collectively contributed less than $ 1 million.

The data suggests that despite the modest contribution of investors with less capital in their wallets, they have allocated larger fractions of their portfolios to FEI. In the meantime, the whales are putting less emphasis on the Fei protocol.

Was the question short-lived?

Fei Protocol introduced a new stablecoin, FEI, which uses a dynamic burning mechanism to maintain the correct peg. Simply put, the crucial feature of the protocol is that it includes a system that prevents users from selling FEI when the stablecoin is trading below the peg. The protocol has launched a decentralized autonomous organization with TRIBE governance tokens.

The emergence of the Fei protocol caused an over-demand in the market due to the two intertwined factors of the bonding curve design and the TRIBE governance token airdrop. Many users were hoping for a quick return, so they tried to buy FEI at a price below the peg, while also receiving TRIBE tokens as a reward. However, the users who bet on the long-term development of the project were also allowed to exchange a percentage of their Fei-genese allocation for TRIBE in advance.

Larger participants who exchanged their genesis assignment from FEI for TRIBE behaved differently than smaller addresses. The data shows that larger contributors chose to receive about double the FEI / TRIBE compared to the smaller addresses. Whales were hungry for the protocol management tokens, and they got what they wanted.

Nearly three weeks after the Fei genesis event, the data suggests a depreciation of the genesis participants in each group. Despite considerable penalties for burns, the Genesis addresses no longer hold, provide liquidity, or expel the tokens.

All groups sold between 40% and 60% of their origin value for a total decrease of 56%. The users who had $ 100,000 – $ 500,000 in their address were found to be the largest contributor to the post-genesis FEI sales pressure, with about 65% of their Genesis value sold.

Notably, the group with the smallest wallet size came in second when exiting the protocol. In general, the users with less capital (groups 5 to 10) were more likely to discontinue FEI than whales (groups 1 to 4).

Returning to the comparison between FEI genesis contributions and user portfolio size, a post-genesis comparison reveals that FEI has struggled to re-establish the link from the very beginning, while TRIBE derailed $ 1.33, down from 43% from its peak. on April 4.

After nearly three rocky weeks for the Fei protocol, the total value of Genesis participants has decreased significantly. What’s important is that distribution has stabilized relative to wallet size, so there aren’t as many obvious outliers as there were during Fei’s inception.

Notably, Fei Protocol raised $ 19 million in March from major industry venture capital firms, including A16z, Framework Ventures, and ParaFi Capital, among others. The past two weeks also saw many fundraising rounds for DeFi projects, raising about $ 31 million in seven rounds.

With a total of about $ 245 million raised in 10 VC rounds of funding in the blockchain industry in total, just one deal made up 49% of the total allocated capital. Overall, these two weeks saw a decline in venture capital funding inflows, down 43% from the previous two-week period.

Other factors overshadowing the Fei drama

As for the trends driving the evolution of the digital asset industry, Coinbase stole the show last week by going public through Nasdaq on April 14. With the stock opening price 1.5 times higher than the quotation reference price, the crypto exchange surpassed traditional exchanges. such as ICE and Nasdaq based on market capitalization on the first day of trading. Still, the debut turned out to be rocky, and the discussion of Coinbase managing to offload their stocks added fuel to the fire.

The race to register a Bitcoin (BTC) exchange-traded fund in the United States has stalled as the Securities and Exchange Commission is reviewing the applications. Meanwhile, Canadian-based 3iQ’s Bitcoin ETF went live on the Toronto Stock Exchange. Canada also went all-in on Ether (ETH) ETFs as regulators approved three ETFs through Purpose Investments, Evolve ETFs and CI Global Asset Management.

Read the full newsletter edition here for more news and alerts, complete with detailed charts and images.

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