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$TRIBE is the governance token for the $FEI algorithmic stablecoin. Fei aims to provide a new decentralized solution to the stablecoin market. Most of the existing stablecoins are either fiat-collateralized and, therefore, centralized or crypto-collateralized, making them capital-inefficient. Other algorithmic stablecoins suffer from no liquidity backing the peg, making them inherently unstable or centralize rewards to seigniorage stakeholders. FEI proposes a model similar in design to fractional reserve central banking, where the protocol issues $FEI for a subsidized price against ETH at its genesis event and subsequently uses the incurred Ether as a treasury to maintain the peg. $TRIBE is the governance token of the DAO controlling the governance of FEI and can be used in governance proposals or swapped for $FEI in a UniSwapV2 liquidity pool.

FEI introduces the concept of product-controlled value (PCV). The Tribe DAO governing the stablecoin issued $FEI at a subsidized rate for Ether at its launch to generate a pool of Ether as its treasury. Tribe then supplied a part of this ETH with freshly minted $FEI in an ETH-FEI liquidity pool on Uniswap to enable trading of the stablecoin. While users can buy $FEI from the Tribe DAO, they cannot sell $FEI back to it but have to sell $FEI on the open market. Stability is maintained through an incentive system. If the price of $FEI exceeds the peg, arbitrageurs can sell ETH to the Tribe DAO and sell their $FEI on Uniswap to generate a profit.

If the price is below the peg, the incentives Tribe installed come into play. $FEI buyers in the Uniswap liquidity pool receive a rebate to restore the peg, while sellers have to pay this rebate and an excess penalty to incentivize the peg to be restored. The further away from the peg the price of $FEI has moved, the bigger the rebates and penalties, making it highly unprofitable for sellers to sell discounted FEI. Tribe can use its Ether reserves to buy back $FEI and burn excess $FEI to reduce supply as a last resort.