DFC

FEI is a reserve-backed stablecoin that works through a direct incentive method, in which FEI can give users bonuses or charge fees for making trades that help it maintain its dollar peg. Users can buy FEI from the protocol, and the protocol takes those assets in reserve. The asset traded belongs to the Fei protocol after the trade. The assets in reserve could even be under-collateralized, and the assets would be deployed elsewhere, such as on the secondary market or – later – in yield-generating projects. Fei’s “genesis launch” is set for March 22, when users will be able to post ETH to get FEI tokens. Early participants in the sale and in the protocol’s liquidity pools on DeFi exchange Uniswap will be incentivized with TRIBE, the project’s governance token.

Swiss crypto bank Sygnum is reportedly launching a yield product based on its own stablecoin, DCHF. The three-month fixed-term deposit product will generate 0.75 percent yield per year. Sygnum claims to be the first regulated bank to offer returns on its own stablecoin.

This US Federal Reserve note explores the potential effects of the widespread adoption of a global stablecoin (GSC) on key aggregate financial sector balance sheets in the United States. To do this, it maps out cash flows of GSC transactions among financial sector entities using a stylized set of 't-accounts'. By analyzing these individual transactions, it infers aggregate and compositional effects on U.S. commercial banking sector and Federal Reserve balance sheets. Through this lens, the note also considers how these balance sheet changes could affect monetary policy implementation, the demand for central bank reserves, and the market for US dollar safe assets.

Bitfinex/Tether Executives and Founders and what they did beforehand.

The worry is that in dispensing with collateral as a line of defense (or using less of it), the new breed of less-than-fully collateralized stablecoins may not be able to weather a major black swan event, say like a market crash, an outbreak of war or a new pandemic. It’s possible that less-than-fully collateralized stablecoins will prove to be an enduring advance in financial technology. If so, they’ll imbue DeFi with true stability while simultaneously disconnecting it from the incumbent financial system. Or they could be highly risky assets that offer only the illusion of safety. We’ll know which it is when the next big market disruption hits.

Sweetcoin is an "rewards"-based is a token designed to return profit users with cash back from using the Sweetbridge platform. Sweetcoin's intended uses are three-fold: to borrow against the net present value of the coin; manage the token to ensure against the asset's devaluation; stake the token as a network operation participant. Sweetbridge describes the Sweetcoin discount token as "the cornerstone of the Sweetbridge ecosystem". Sweetcoin’s value comes directly from its ability to grant monthly discounts that grow as the revenue in the Sweetbridge network grows, according to the project. The "rewards" are generated for users by locking a minimum amount of the Sweetcoin token in a wallet from month to month.

"Can an algorithmic stablecoin truly achieve long-term viability? Will algorithmic stablecoins always be subject to extreme expansionary and contractionary cycles? Which vision of an algorithmic stablecoin is more compelling: a simple rebasing model or a multi-token “seigniorage” system (or something else entirely)?"

"All in all, Ampleforth is an innovative cryptocurrency that solves a major problem that faces cryptocurrency – price stability. The biggest hurdle Ampleforth will have to overcome is people understanding how rebasing works. It’s not a scam or even dangerous.

The primary purpose of using a stablecoin is to achieve a peg to a fiat currency, usually the U.S. dollar. However, "non-pegged" stablecoins aren't pegged to any fiat currency - their values float and change over time. Non-pegged stablecoins aim to have low short term volatility, allowing them to be practically used as a unit of account. However, over the long-term their values change according to their own demand and the demand for the underlying crypto-assets. Ampleforth, which was launched in June 2019, has been followed by Float (launched on February 5, 2021), Rai (February 17), and Fei (March 22).

Fei Labs concluded a successful genesis launch of its Fei "non-pegged" stablecoin, raising nearly $1.3 billion in Ethereum from over 17,000 contributors. Stablecoins are typically pegged to a fiat currency, usually the U.S. dollar. However, the values of non-pegged stablecoins float and change over time. They aim to have low short term volatility, while allowing their values to change according to their own demand and the demand for the underlying crypto-assets, over the long term. Ampleforth (launched in June 2019) was one of the first, being followed by Float (February 5, 2021), Rai (February 17), and now Fei.

Less than a week after the Fei protocol's April 4 launch, Fei Labs found a vulnerability in the incentive calculation of the Ethereum-backed algorithmic stablecoin. The team patched the vulnerability on April 6, but it did not prevent the stablecoin from losing 20% off its peg. Fei uses a bonding curve to manage supply and demand based upon its collateralization levels, and uses a system of ‘direct incentives’ to penalize the withdrawal of liquidity during periods of selling pressure. This caught many investors off-guard as they would have to take a hit when withdrawing their ETH collateral or the supposed dollar-pegged tokens it generated.

The $1 billion Fei Protocol stablecoin project has gotten off to a very rocky start. 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. 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 didn’t understand Fei’s “direct incentive” method for stabilizing the price. For the first few days FEI danced around a nickel to a dime off the target. Since yesterday it has tanked hard, now almost a quarter off its goal of $1, according to CoinGecko.

Despite the apparent complexity, Fei’s mechanism is based on a similar principle to most fiat currencies, where central banks often use their own reserves of gold and foreign currencies to back their currency’s value during periods of strong selling pressure. Direct restrictions on selling are also not new, with countries like Lebanon, Venezuela and Turkey offering recent examples of enacting stringent capital controls in a bid to stabilize their currency’s value.

This Bank of Canada paper proposes a three-step framework to assess the risks of stablecoin arrangements. It is designed to allows authorities to understand the defining characteristics of stablecoin arrangements, to be specific about any concerns they may have, and to be objective in their treatment from issuer to issuer. First, the framework classifies the stablecoin arrangement into three parts, coin structure, related transfer system(s) and related financial service(s), and then categorizes the attributes of each one. Secondly, it identifyies specific risk scenarios that are relevant to the stablecoin arrangement, and thirdly, it quantifies the range of probable loss and possible frequency associated with the identified risk scenarios.

Circle has partnered with Signature Bank to hold billions of dollars in reserve deposits related to USD Coin. The two companies also committed to a long term roadmap that will start with the integration of Circle into Signet, the Bank’s blockchain-based digital payments platform.

"So while it is certainly good news that Tether is catching up to its competitors by providing attestation reports, it remains the laggard when it comes to transparency. Not all attestation reports are equal, and Tether’s remains the least informative of the bunch. For now, at least."

"The question remains as to why Tether management still refuses to provide more transparency. If indeed the company has nothing to hide, putting all questions to rest is astonishingly easy: move the money to a select pool of large well-known banks, and have the statements properly audited by a select pool of large well-known auditing firms. Commit to performing and documenting funds certification for example quarterly and that’s it, you’re done. If Tether wanted to go a step further it could also disclose the investment strategy (or lack thereof) it pursues with the cash under its responsibility. In my mind there can be only one reason why the firm doesn’t follow those very simple steps."

"Base-money protocol Ampleforth has announced the launch of a new governance token Wednesday, setting the stage for further expansion and community engagement following a successful year of adoption. "

"Coinbase... [will be] listing tether (USDT), the world’s dodgiest stablecoin. Tethers... are a stand-in for real dollars, used mainly on offshore crypto exchanges that can’t get proper banking... Coinbase only supports ERC-20 USDT, a reference to the nearly 24 billion tethers that live on the Ethereum blockchain. (Another 26 billion are on Tron, with a smattering on Omni, Algorand, EOS, Liquid, SLP, and Solana.) At the moment, you can only transfer USDT onto Coinbase; you cannot move tethers off the exchange."

"After almost three rocky weeks for the Fei Protocol, the total value held by genesis participants has decreased significantly. What is important is that the distribution has stabilized relative to wallet size, so there are not as many clear outliers as during Fei genesis."

The market capitalization of Tether (USDT) stablecoin has crossed the $50 billion mark, with the supply on Tron's blockchain ($26 billion) exceeding that on Ethereum's ($24.4 billion), because ransaction fees are lower, and confirmation times faster on Tron. Most of the Tron-based Tether's supply is on the lightly-regulated Binance, Huobi, and OKEx platforms. USDT remains the largest stablecoin by market capitalization, with about 66% market share, followed by USDC (17%) and BUSD (9%).

"In the crypto markets there are no MMFs. But they have a close equivalent—private sector stablecoins. For cryptocurrency investors, traders and financiers, digital asset tokens like Tether (USDT) and Circle (USDC) perform the same function as dollar-pegged money market funds in the legacy system."

"Tether Holdings Limited made available its Consolidated Reserves Report for March 31, 2021 and an accompanying assurance opinion by Moore Cayman attesting that the information is accurate. It is our plan to release Consolidated Reserves Reports and related assurance opinions on a quarterly basis."

In March, French startup Lugh launched a new Euro stablecoin (EUR-L) backed by deposits held in a Societe Generale bank account and currently available on the French crypto exchange Coinhouse. EUR-L is issued on the Tezos blockchain, and Lugh reports that users will be able to access monthly reports regarding their reserves, validated by a global accounting firm.

Tether must now report on the assets backing the coin by May 19, after the operator and the related trading platform Bitfinex pledged to offer more transparency on its reserves under the terms of its $18.5m settlement with the New York attorney-general’s office in February.

"It took a month and a day, but the FEI stablecoin has finally hit its target price of $1. Since its debut on April 3, FEI has mostly traded below its goal of parity with the U.S. dollar. From April 7 to April 20, it stayed below $0.80, more than 20% off its peg. Things started to turn around on April 20, when the price began to rise toward the goal. Tuesday morning, FEI finally hit $1. It remains to be seen if FEI can hold this price."