I was reading through the Fei Protocol whitepaper. It’s a new stablecoin protocol, financially backed by a16z and Coinbase.
The authors claim that Fei is able to use “dynamic mint rewards and burn penalties on DEX trade volume to maintain the peg”. If I understand correctly, the protocol retains added value from purchases above the peg and uses this to bring the peg back up when it dips below. I think this will allow Fei to maintain its peg without needing as much collateral to back it.
Please correct me if I’m wrong on any of this. I just wanted to bring attention to this new mechanism and check to see if Maker would be able to add a similar “direct incentive” mechanism.