It could have been that the penalties switched off somehow triggered that frequent reweights. Anyway, it’s either another team’s false move, or more likely (can they be that stupid?) they just helping their friends to exit.
At the time of writing my previous post, the protocol held 474k ETH for 807.9M FEI circulating.
Now, 1 hour later, the protocol holds 473.3k ETH for 806M FEI circulating.
The protocol collateral improved from 117.34% to 117.44% last hour (assuming constant ETH price of 2000$). ~700 ETH got drained out of the PCV, but ~1.9M FEI got out of circulation.
You keep throwing people into confusion. I said nothing about the collateralization ratio. Indeed it may be growing, as the FEI price continue falling. What i said is that PCV, be it the ETH held by the protocol or ETH + FEI, has dropped.
Reweights began triggering unexpectedly when the Guardian was employed to disable burn incentives as part of the response to yesterdays vulnerability report. All mint and burn incentives are off. Reweights are now turned off as well. We expect them to be re-enabled when incentives come back online. The core team is working on a detailed post-mortem and other proposals to support the peg.
Nice, so apparently they were morons enough to disable penalties without disabling the reweights. Nice! at least someone could exit without much loss.
To explain, anyone had been eligible to call a reweight if she paid for the gas herself. After the burn penalties were removed someone (i still think someone affiliated with the team or team members themselves, because they can’t be that stupid) triggered a series a reweights and was able to exit.
IMO Fei is slightly over-valued for a currency that has just started. So it’s pretty much expected to see such high sell pressure. Further, the reweights + removing of sell fees is in a way a refund with a 1% loss to genesis investors.
So reducing the PCV with maintaining the same collateralization ratio is actually a good thing. As it helps the protocol meet it’s true actual demand.
The one criticism you can give is yes, possible that things are moving a bit too fast without much oversight. But tbh there are far more people demanding action to be done asap as well.
If the PCV didn’t lose anything, why not just open the reweight function for users all the time? It’s absolutely a mistake from team’s decision. They just didn’t think about what will happen after close both reward rate and burn rate.
I tell you that it’s absolutely impossible that they didn’t realize that keeping reweights available with burn penalties removed would cost tons of ETH fro PCV. They just helped their friends/themselves exit.
Good that blockchain remembers everything. I’ll track the addresses that managed to sell FEIs around those reweights later.