A case for the governance token distribution in Fei’s long-term interests

One of the major mistakes during the Genesis, which led to the current situation was an inadequate decision on the governance token (aka Tribe) distribution. The decision to reward early adopters of the experimental stablecoin with a bonus denominated in Tribe in practice allured hordes of very short-term thinking and ignorant mercenary capital. We all know what happened next.

But what is done is done. It has already been suggested that after peg is hopefully restored and the team gets back to long-term development goals, some kind of a second Tribe distribution should be carried out. I support this idea. In my view it should be done not only to reward those who supported the project throughout this whole debacle, but more importantly, to build up a a healthy governing body consisting of people who proved by action their commitment to Fei.

40% of Tribe are now under DAO Treasury governance. I suggest that these tokens should be distributed among those, who pre-swapped and didn’t sell their share, because where else would you find more loyal believers? However, I would argue that this distribution should come with a number of caveats.

First, as only those who pre-swapped and stayed along during the crisis (didn’t sell) should participate, the cut off date should be some day after Genesis but before the announcement, let’s say within a week.

As per the distribution formula: I disagree that it should be a linear function, i.e. everybody getting pro rata as per their contribution. Because when a person chose 50/50 pre-swap, they were obviously hedging their risks: they hoped to get 50% stablecoins + 50% in more volatile/risky Tribe tokens. A person who pre-swapped 100% risked more, is more loyal and has more commitment to Fei’s long-term interests, hence they can be entrusted more governance votes and should be rewarded for their risks as well. Mind you that VCs got 100% pre-swap so to say (no stablecoin, only volatile tokens), plus on a far earlier stage of software development, they’ve undertaken respective significant risks, hence the price.

On the other hand, I disagree with those, who suggest some cut off level, say 90% pre-swap: it’s unfair and also the level is totally arbitrary and capricious.

I suggest an exponential function:

T = K * (Sˆ(M*L)), where
T —Tribe tokens received as a result of the second distribution,
K — first round contribution,
M — individual pre-swap ratio,
and S, L — constant parameters, which can be calculated from the Genesis data, i.e. a number of wallets, which pre-swapped, but didn’t sell, and the distribution of those wallets as per their pre-swap ratio. (Team: I’m open to work with you on this, DM me, if ok.)

Obviously, it shouldn’t be a one moment airdrop, there should be some vesting period, say 12 months.

Finally, to prevent overconcentration of governance tokens in whales’ hands, some max cap can be introduced, e.g. not more that 1% of Tribe per wallet.

One more thing: the team could think about one side Tribe farming for those with more Tribes than Fei on hands: DODO has done this, I’m not sure how, but it is already working.

NB! That’s not an argument for some compensation or bailout. Fei Labs can’t compensate in each case of downward market or force majeure. This is an argument for rewarding and leveraging pioneering risk-taking long-term commitment to the project by handing over governance of the system to people who have provably invested in the long-term vision in the interest of future-proof governance stability.


Disagree. It’s only fair if all TRIBE holders can benefit from any future compensation, not just preswappers.

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Could you justify your hypothesis? why?

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There is going to be unhappy with any allocation scheme, since no small fry made money in this thing

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It’s not a matter of compensation, it’s a matter of leveraging risk-taking commitment by handing over governance of the system to contributing people with long-term interests in the interest of future-proof governance stability. Please, reread the post.


It doesn’t make any difference. You can’t really separate preswappers and the second guy who market bought TRIBE after it’s listed on Uniswap, period.

I’m aware 100% preswappers would disagree, but any proposals trying to only bail out preswappers will be bad for the price of TRIBE in long term.

It is very easy to write script my friend. This is blockchain. Everything will be transparent. You got data!!

When you buy before IDO/IPO/ICO you take more risk, because you don’t know where the open market will go. Period. People, who pre-swapped, couldn’t predict current situation. That’s their risk. That’s the reason why VCs get the better price the earlier they get in.


The goal of this proposal isn’t to mitigate the losses of TRIBE holders, it’s to reward the early adopters of this project. Those who sold their TRIBE are not aligned with the long-term prosperity of the FEI protocol. I do agree that some people may not get the distribution, but that’ll be a very small minority (you can also distinguish wallet transfers from selling).

Regarding the idea of burning TRIBE instead of distributing it to the pre-swappers, while it may save gas, it benefits larger whales more than the average user, which goes against decentralization (if we were to burn the entire DAO, a whale who owns 10% of the supply would now own 16.66% of the total supply, compared to a user with 0.1% ->0.167%). This allows them to hit quorum + have larger voting power.


Do you see them separating and trying to bail out only a particular group of TRIBE holders such as preswappers or LP token holders?

All TRIBE holders are equal after the protocol kickstart. There’s no point of submitting proposals wanting privilege that would divide TRIBE holders.

Yes…but the genesis is a very special event. And nothing prevents from rewarding early adopters given the risk they took.

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I like the ideas here. The tribe DAO should go to long-term holders who bought into the vision, because they have suffered the most and it should be the other way around.

Keep it simple though. Any TRIBE that was pre-swapped (regardless of percentage) and held for 12 months should get the additional Tribe. That way

(1) it’s a future event that compensates not just the original contributors but
(2) rewards continued holding
(3) we don’t need to complicate things with time locks.
(4) insures that future governance will be by the most dedicated members of the community
(5) doesn’t further enrich the developers who took an outsized proportion of Tribe


But whales are a part of the ecosystem too. Their capital funds the same stuff we do but just at a larger scale. Telling one group of people that their losses are more important than another doesn’t sound very democratic nor aligning rewards with risk in the space. So what if a whale gets more of the protocol, it might force management to better align with Tribe holders rather than trying to keep their reputations and control intact. We need the invisible hand.

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I don’t think bailing out preswappers is the intent of this proposal (the distribution would come with a vesting period, so whales couldn’t dump their TRIBE, like how genesis did, forcing those with a large stake to be more invested in the protocol). It’s to do what the genesis sought: rewarding those who believed in the protocol before it released, and has long-term alignment with the project.

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There is a reason for antitrust laws. The invisible hand isn’t always a good thing.

But whales are a part of the ecosystem too

And there is no way to know who used multiple addresses. I used 3 myself

Not rewarding all TRIBE holders is bailing out a particular group. A last minute preswapper that spent $3.2, and the first market buyer of TRIBE/ETH pool (let’s say) for $3.1 should the considered same.

I’m all for decreasing the sell pressure of TRIBE and rewarding anyone holding TRIBE for longer terms. CRV has very interesting and inspiring models: Boosting your CRV Rewards - Curve Finance


You sure picked a good project to express that opinion :rofl:

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Another idea that achieves many objectives is to announce a future snapshot, say May 1st, of everyone who owns Tribe regardless of how they got it, and in whatever form (actual Tribe or a pool token containing Tribe). Make the promise that they will receive X more Tribe in 24 months if they hold their position.

This way we encourage buying and holding Tribe starting NOW, and everyone gets a fair shot at the “Leviticus” event :joy: (first there was Genenis, then the Exodus). It ensures a long-term project-friendly group of governance voters who are aligned with the developers and investors.


@pavel I think you are missing @oguz 's point. The same guys who bought Tribe post Genesis @3.2 ALSO DID NOT KNOW what direction the price of Tribe could go. Some people did not participate because they just didn’t know how to.

Secondly, I would also challenge you on favoring only the pre-swappers who never sold Tribe. Some people did a 100% pre-swap to Tribe, took a 50% hit, and smartly decided to hedge their losses by exiting to Eth or Fei. This people should not be neglected. They were also damaged!! Actually, if there’s anyone to compensate for a PERMANENT LOSS, it is those pre-swappers who sold Tribe at a loss. You, and others who are diligently holding have an Impermanent Loss and NOT a Permanent Loss.