Does DeFi need more regulation, given how some protocols are being exploited? The decentralized finance industry has seen its fair share of incidents, either due to human error or otherwise. As a result, the call for regulation has never been louder, even if it may not necessarily have the expected outcome. People who have kept close tabs on the DeFi space will know protocols can come and go in the blink of an eye. Although numerous hacks, thefts, and phishing attempts exist, some projects close for various reasons. One example is Fei Protocol, which is still valued at $47 million through its FEI stablecoin. Those numbers would be associated with a healthy project, although things are not as black-and-white as they might seem. A DeFi protocol valued at $47 million is quite stellar, especially in the current macroeconomic conditions. However, Fei Labs – the team behind Fei Protocol – deems it best to throw in the towel. One must consider the group raised $1.3 billion in Ether to build its decentralized stablecoin. Even at the current valuation, the project is worth a lot less than the amount raised. The funds were used as collateral for its FEI stablecoin, indicating it was all put into the project in one way or another. However, FEI is not like DAI, the native Ethereum stablecoin. Various crypto assets back every FEI, but the Fei Protocol owns these assets. Users effectively sell their crypto to acquire a stablecoin instead of borrowing against their assets through higher collateralization ratios.
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