The post-genesis state of the Fei Protocol


Following the Fei Protocol falling short of expectations at the beginning of April, much ink has been spilled on the doomed design of the FEI stablecoin and the possible ways to recover. Covalent’s latest findings in Cointelegraph Consulting’s biweekly newsletter adds up to the discussion by taking a closer look at how the Fei Protocol post-genesis drama unfolded, by the numbers.

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

Retail investors holding $500–$5,000 in their wallets represent the largest group in terms of the number of contributors, making up 43% of contributors, but only 1.24% of contributions. The third-largest group by the number of contributors 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 allocated larger fractions of their portfolios for FEI. The whales, meanwhile, bet on the Fei Protocol less heavily. 

Was demand short-lived?

Fei Protocol introduced a new stablecoin, FEI, which uses a dynamic burning mechanism to maintain the correct peg. To put it simply, the crucial feature of the protocol is that it incorporates 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.

Fei Protocol’s genesis triggered excessive demand in the market as a result of the two entwined factors of the bonding curve design and the TRIBE governance token airdrop. Many users were hoping for quick returns, so they tried to buy FEI for 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 pre-swap any percentage of their Fei genesis allocation for TRIBE.

Larger participants who exchanged their genesis allocation of FEI for TRIBE acted differently than smaller-sized addresses. The data shows larger contributors opted to receive about double the FEI/TRIBE when compared to the smaller-sized addresses. Whales were hungry for the protocol governance tokens, and they got what they wanted.

Almost three weeks after the Fei genesis event, the data suggests a decrease in value held by genesis participants in each group. Despite significant burn penalties, the genesis addresses are no longer holding the tokens, providing liquidity with them or staking them.

All groups sold between 40% and 60% of their genesis value for a total decrease of 56%. The users holding $100,000–$500,000 in their addresses turned out to be the biggest contributors to the post-genesis FEI sell pressure, with roughly 65% of their genesis value sold.

Notably, the group with the smallest wallet size came second in quitting the protocol. Overall, the users with less capital (groups 5 to 10) were more likely to stop holding FEI than whales (groups 1 to 4).

Circling back to the comparison between FEI genesis contributions and user wallet size, a post-genesis comparison reveals that since the very beginning, FEI has struggled to restore the peg, while TRIBE has gone off the rails at $1.33, down 43% from its peak on April 4. 

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.

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

However, with roughly $245 million raised in 10 VC funding rounds across the blockchain industry in total, just one deal made up 49% of the total capital allocated. Overall, these two weeks saw a decrease in VC funding influx, down 43% compared to 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 shares’ opening price 1.5 times higher than the reference price for listing, the crypto exchange outstripped traditional exchanges like ICE and Nasdaq by market capitalization on the first day of trading. Yet the debut turned out to be rocky, and the discussion around Coinbase management offloading their shares added fuel to the fire.

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

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

Cointelegraph’s Market Insights Newsletter shares our knowledge on the fundamentals that move the digital asset market. With market intelligence from one of the industry’s leading analytics providers, Covalent, the newsletter dives into the latest data on social media sentiment, on-chain metrics and derivatives.

We also review the industry’s most important news, including mergers and acquisitions, changes in the regulatory landscape, and enterprise blockchain integrations. Sign up now to be the first to receive these insights. All past editions of Market Insights are also available on


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