AIP - 2: Accept FEI as a collateral for the Euro stablecoin

Status: Proposition

As the reserves in USDC and DAI for the protocol are growing, it would make sense to start accepting new collateral types for Angle. This is just the early days of the protocol, so to play it safe it would make sense to start by keeping using stablecoins collateral types.

One stablecoin that stands out is FEI: the protocol has gained a huge treasury (they call it their PCV or protocol-controlled value) from its beginning and is now super over-collateralized making it a safe protocol to integrate with. Besides let’s not forget that the protocol can impose a cap on the number of stablecoins issued using one collateral type so it can perfectly control the risk induced by launching a new collateral type, and control the reserves.

FEI has some other advantages which make it suitable to an integration with Angle:

  • it has a Chainlink oracle feed and some high liquidity Uniswap V3 pools: oracles won’t be an issue for launching this collateral
  • it is integrated with Aave meaning that the protocol will be able to build strategies on top of it incentivizing liquidity providers to come for this collateral type
  • they have launched a liquidity as a service program meaning that they could potentially mint agEUR with FEI and bring some extra FEI to seed an agEUR-FEI pool on Uniswap V3, V2 or even on Sushiswap. To bootstrap the collateral and the pool, we could also incentivize with ANGLE the pool.
  • They are alined with our vision of making fully decentralized stablecoins and are a potentially interesting partner for the growth of the project

Happy to hear people’s thoughts in this thread.

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Although FEI isn’t as well-known as f.e. the (too) much used USDT (with all its caveats), like you’ve explained just now it is a very safe stable asset; and from the very same decentralized viewpoint as Angle pursues. Its much deserved growth over the past months has been astounding. I’d happily welcome it as the next collateral! Let likeminded DeFi benefit from eachother

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I really like the point about using more Decentralized stablecoins as collateral, because of how it aligns with Angle’s vision.

I agree that FEI is a quite robust and flexible protocol which continues to make interesting developments and collaborations in this space, and that both protocols would benefit from this integration. Let’s do this!

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Had to do a bit of research on what FEI is to be honest (to mirror Dereks point of it not being well known). Looks like a great project and well funded. FEI does seem to offer more on top of just being a collateral token with liquidity as a service. Makes sense to go ahead but it would be interesting to see the uptake.

Glad the view is to focus on decentralised projects and visions. As for another decentralised stablecoin RAI from Reflexer labs could also be worth consideration, they keep it simple with just ETH as collateral.

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Adding FEI makes sense here, it allows the protocol to diversify its collaterals and therefore diversify the risk. FEI has shown resilience over time, although it’s definitely younger than DAI or USDC.

This brings the question whether the protocol can enforce a cap on new collaterals, for example, a soft cap of max $20M of FEI initially, to ensure the protocol does not end up being over-exposed to certain collaterals.

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Very good question ! We could indeed enforce a cap on the number of agEUR minted through a specific collateral. So we could ensure than no more than 20M agEUR are backed by FEI

@sogipec made this proposal on the governance of FEI: Potential Proposal: Putting some FEI in the Angle Protocol - Ideas - Tribe, it’s worth checking !

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I don’t know much about FEI, but I think we really need to add more coins to strengthen agtokens.

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Adding Fei is a good move!
Although Fei is young, it can provide so much at most 1bln as collateral from its PCV.

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Hey - Bruno from Fei community!

Congrats for the launch, excited to see a decentralized Euro stablecoin.

I support the proposal and also some allocation of PCV in agEUR as I commented in the Fei forum.

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Hey Bruno. Given the situation that happened in the spring, and also the undercollaterized nature of the FEI, can you be sure that the FEI will be able to keep the peg? I understand that the second version is significantly different, but still. And by the way, are you still using TWAP or already chainlink?

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So actually, FEI is now super over-collateralized, they have a war treasury of several hundreds of millions. We’d still be using Chainlink and a TWAP

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understood, now it is clear my information is out of date. thanks for the explanation

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I think angle need to add more coins to strengthen agtokens and I agree that FEI is a quite robust and flexible protocol which continues to make developments and collaborations in the trading market.

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Thanks for the question Prague, it motivated me to write a full explanation about Fei history and its current situation.

I think many people in crypto community still hold this first impression of Fei. Now with Fei v2 is time to tell what happened during this time and how the protocol is stronger now.

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Ty Bruno, you are right, a lot of people still don`t know about FEI improvements.
We should spread the word about it:)

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