The Chinese speaking community of the discord server has been extremely active (by some metrics the most active channel on the whole server!) and consisted of many very high quality discussions so far; per the request of the community, I have translated a summary of the most popular suggestions for this forum:
Time is of the essence in restoring the ETH-FEI peg; the liquidity must be restored quickly while the price of ETH is still high. Should the price of ETH plummet, the ensuing death spiral can cause permanent damage to the project. ETH was trading at $1500 not two weeks ago, there is no reason why it can’t go back to those prices in the near future.
The most important consensus is: people who wish to exit FEI immediately (apes, arbitrageurs, freeloaders for airdrop etc), must be allowed to leave. Without a thorough exit of these elements, the underlying mechanism of FEI will be perennially stressed with sell pressure and people who are long term supporters of the project will be unable to maintain the peg as designed because they will be overwhelmed by the volume of exiting trades.
An upper limit on Burn Rate is the best way to proceed. Currently the very high burn rates have negated direct incentive mechanism altogether, instead it has killed liquidity; the 2.5B of LP on uniswap is phantom liquidity with no volume right now. By capping the burn rate to say, 5-9%, will allow everyone who wishes to leave to do so after paying a fair price accounting for their tribe airdrop gains. that is to say, burn rate + price disparity to peg should equal to roughly the profits gained from selling the tribe airdrop, allowing people to exist without material damage to LCV.
Mint rewards should not be reinstituted until the liquidity issue is totally resolved; since minting is ultimately dilutive and will allow frontrunning bots (called “scientists” in chinese) to buy immediately before reweight, and sell immediately after reweight. This way the bots will reap the mint rewards without contributing any liquidity or bringing the price any closer to the PEG.
great suggestions. as an alternative to capping burn you could just move the curve down so its 100% penalty somewhere around 10 cents instead of 80 cents as it is now.
this would let people out but benefit ppl staying in by increasing the PCV in case ETH tanks
Thanks for this, @cozeno . Is there a consensus view on whether to swap the PCV for a stable coin like Dai?
As many have said, the surest way to insure that the value of the PCV and the collateralization ratio both increase is to swap the ETH for Dai and to invest it some play like Yearn.
This also seems like a sure gain for the team, since Fei holders would presumably be cashed out at no more than the $1.01 they bought in at
the new consensus, after the removal of burn rates is turning out to be to execute many reweights in quick succession. The point is to burn thru the PCV as quickly as possible and recycle as much circulating FEI as possible.
This will raise the collateral ratio of the remaining FEI and Tribes, and allow the PCV to settle at a value that corresponds to the real stable coin based demand of FEI. Currently a large portion of the capital deployed in LCV is speculative or airdrop freeloaders. They must be cut lose to allow the original features of the protocol to work.
I find all the Chinese community’s points as you report them to be valid, and organically linked.
I would definitely vote in favor of a flavor of this as a proposition!
Amazing contribution, especially for guys like me who are missing some of the points and the prioritization to make.