Gyroscope can continue Fei’s vision of a decentralized stablecoin

TL;DR: the Gyroscope stablecoin could be a ‘white knight’ channel for Fei’s PCV and continue Fei’s vision of a decentralized stablecoin.

We on the Gyroscope core team feel that there is a lot to commend in Fei’s vision of decentralization and the active community at the heart of the project. Tribe holders share Gyroscope’s ideals and have valuable real-world experience in the process of governing a decentralized stablecoin.

Some of the core principles of Gyroscope are similar: radical decentralization from the beginning of the project, as well as constructing a stablecoin that mitigates centralization risk. The technology that we have developed for Gyroscope carries these ideals a step further in terms of automation, resilience, and protection for stablecoin holders.

How Gyroscope improves on the Fei design

The Gyroscope core team has watched the events in the Fei ecosystem closely. Back in March 2021 we voiced our concerns about some aspects of Fei, not least that a liquidity crisis at launch seemed to be by design, as well as worries about an incentive mismatch in governance where governance would be able to take PCV as opposed to having earned something by managing PCV well. A scenario in which TRIBE holders are paid out before hack victims illustrates a wider incentive mismatch in TRIBE governance.

TRIBE holders effectively took very risky bets with PCV on behalf of FEI holders, mainly through exposure to the ETH price at launch. If TRIBE holders are paid out as proposed, then effectively they receive all the upside of these risks while FEI holders would have taken all of the downside risk (while Fei holders can redeem 1:1 now, this wouldn’t have been possible if the Eth price had gone the other way). The excess PCV in Fei today is down to luck and bad design. The bet happened to pay off and a lot of early FEI was redeemed at bad prices due to the ineffective redemption mechanism at launch. Such bad incentive structures should not be rewarded. Instead, we believe the reward for TRIBE holders should be related to managing PCV well in a risk-adjusted sense.

We believe that the DeFi space as a whole needs more critical self-reflection and self-regulation to weed out bad incentive structures, which is why we think it’s important to discuss this now. At Gyroscope we’ve spent the last two years designing a PCV-based system that specifically mitigates the issues we’re witnessing in FEI from first principles.

What is Gyroscope, in a nutshell?

Gyroscope is a new, non-custodial and fully-backed stablecoin. We’re currently in the process of rolling out the system, with the full mainnet launch planned for November. The Gyroscope protocol aims to have every 1 unit of stablecoin to be backed by 1 USD of collateral. The collateral is held in a basket of protocol controlled assets, where this basket aims to diversify all risks in DeFi to the greatest extent possible. It considers more than just price risk - also censorship, regulatory, counterparty, oracle and governance risks. The stablecoin also features autonomous price bounding, where prices for minting and redeeming the stablecoin are set autonomously to balance the goal of maintaining a tight peg with the goal of the long-term viability of the project in the face of short-term crises.

Options for the Fei Community

While Fei is winding down, the Gyroscope community would always welcome the involvement of Fei community members. We would like to start a conversation about continuing the best parts of the FEI community and vision within Gyroscope.

Keen to get involved? We invite you to:

  • Join our community and contribute to our community by bringing your wisdom from lessons learned in governing Fei
  • Learn more about Gyroscope in our at
  • Consider putting the PCV you withdraw from TRIBE/FEI and porting it over to Gyroscope. This could take the form of a ‘white knight’ channel to bring PCV over to Gyroscope to continue Fei’s vision of a decentralized stablecoin - we welcome discussion around this. If you think that the Fei community should consider porting its PCV over to Gyroscope, a project with similar ideals but a superior design, speak up.