The popular decentralized stablecoin Fei (FEI) may soon be shuttered. An attack in April 2022 that caused approximately $80 million in damage to various Rari Fuse pools forced Fei Protocol to find a solution. The altcoin project’s offer of compensation to repay the funds led to its bankruptcy.
Popular altcoin could stop its activities
Joey Santoro, founder of Fei Labs, has published a proposal to use FEI tokens to DAI and distribute it among TRIBE holders. This proposal was to make up for $80 million stolen from various Rari Fuse pools in April 2022. However, Fei Labs’ latest proposal, partially proposing to cancel Tribe DAO’s participation, received mixed feelings from the community. Santoro announced the proposal for the future of the Tribe DAO in its latest proposal, which reveals the company’s intent to compensate hack victims.
The past months have been difficult for the Tribe DAO. These challenges and outcomes were not what anyone hoped for.
After deep consideration, Fei Labs is proposing the following after considering all stakeholders. We believe this is the responsible path forward. pic.twitter.com/TbzWeCdhEr
— Joey Santoro 💚🦇🔊 (@joeysantoro_eth) August 19, 2022
Community members question the lack of timeline and exact numbers in the proposal. One of the members wrote:
I think trust has been broken, and I can’t believe that such a vague proposal, which a bloodthirsty army of lawyers probably overlooked, would be in users’ favour.
Hacker didn’t respond to Fei Protocol’s $10 million offer
Fei Protocol previously offered a $10 million reward for the hacker to return $80 million. However, the hacker did not respond to this offer.
We are aware of an exploit on various Rari Fuse pools. We have identified the root cause and paused all borrowing to mitigate further damage.
To the exploiter, please accept a $10m bounty and no questions asked if you return the remaining user funds.
— Fei Protocol (@feiprotocol) April 30, 2022
In December, decentralized stablecoin project Fei Protocol merged with DeFi protocol Rari Protocol. It also became two linked protocols managed by a single group. Later, Tribe DAO. In April, the combined project was hacked for $80 million. As quoted by Kriptokoin.com, Tribe DAO has now offered a $157 million reimbursement package aimed at compensating the victims. Ultimately, this proposal will result in the dissolution of the DAO.
Fei Labs is leaving the DAO
Fei Labs founder Joey Santoro has published a proposal for one of the largest algorithmic stablecoins, Dai (DAI), to use the existing circulating FEI supply. Should this proposal pass, the remaining PCV reserves would be distributed among the TRIBE token holders, which formerly acted as a balancing act between the FEI and the USD to keep it steady at 1:1. However, it seems that Fei’s (FEI) protocol-controlled value (PCV) vulnerability is the real reason the FEI team closed the project. DefiIgnas, a DeFi researcher, summed up the decision to shut down on Twitter:
On a final note, one more reason for Fei’s closure is that the PCV model was not fit for the product market. In DeFi, yields were low and risks increased, while the protocol struggled to generate revenue.
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