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.
(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.