U.S.-regulated cryptocurrency custody firm Anchorage is adding support for TRIBE, the governance token attached to the FEI stablecoin, which tanked terribly after attracting a record $1.2 billion in backing.
Thanks to a lot of hype and speculation, FEI, which employs a novel system of incentives and penalties to hold parity with the dollar, has turned out to be an unstable stablecoin – at least since its explosive launch last week.
The support of Anchorage is intended to help the project find its feet, Anchorage co-founder Diogo Mónica said in an interview with CoinDesk.
“Given this is the most successful launch ever of a stablecoin in terms of liquidity, I think it’s very much expected to have some initial volatility,” said Mónica. “I do think it’s a very legitimate approach and Anchorage’s support will get more institutions on board.”
Stablecoins of all stripes are an essential part of crypto. The most successful versions so far tend to have corresponding amounts of U.S. dollars held in custody, with perhaps some auditing provided. But crypto’s true believers want to escape fiat and are exploring a spectrum of possible solutions, from the relatively centralized to more decentralized options that use algorithms to maintain a peg.
The FEI protocol aims to establish a middle ground, having created a decentralized trading protocol on popular decentralized finance (DeFi) trading platform Uniswap while attempting to incentivize users to hold the stablecoin by burning some FEI anytime they sell to the Uniswap pool and giving them a little anytime they buy from it.
However, a rush to get hold of TRIBE governance tokens and bag some gains has meant the FEI penalty mechanism is impacting the supply (selling the coin) but also making demand disappear.
Controversy aside, Anchorage has been committed to supporting early-adoption networks, including tokens like Rally, Radicle and Hegic.
“Our clients are betting on a digital-assets world, but they don’t quite know exactly which model is going to win out: fully pegged, fully decentralized or something in between like FEI,” said Mónica, adding:
“From the beginning, we have stablecoins as part of institutionalization of the space, and different types of decentralization, centralization and backing-over-collateralization narratives.”