Allow $FEI holders to redeem 0.95$ worth of $ETH for 1 FEI

Because people got into $FEI for the sole purpose of getting a $TRIBE airdrop, and because the protocol itself has no price floor because it does not allow $FEI holders to redeem $ETH, the immense sell pressure is leading $FEI to trade below peg, with the associated huge burn penalties. Reweights obviously don’t change this situation as people have no faith in $FEI’s ability to hold the peg sustainably. Reweights only benefit bots who capture the opportunity to sell at 1 dollar.

The protocol is overcollaterized. So every $FEI holder who wants to exit and get 1 dollar worth of $ETH could do so without threatening the solvency of the system. However, this would obviously be at the expense of the PCV. The big PCV is probably one of the only current assets of this protocol and $TRIBE holders may not be happy with $FEI holders exiting comfortably. When $FEI holders sell with a huge burn penalty, the protocol is essentially capturing some value because the mint rewards are always lower than the burn penalty. $TRIBE holder have control over the PCV so they may not be unhappy with the fact that $FEI holders sell at a huge loss and therefore may oppose the idea of allowing $FEI holders to exit at 1 dollar. In that sense, incentives between $FEI holders and $TRIBE holders are not aligned.

But in another sense, the incentives between $TRIBE holders and $FEI holders are aligned. $TRIBE holders know that the sell pressure is not going to stop. For the sell pressure to stop, $FEI would need to have liquidity around 1 dollar. This can’t be achieved as long as $FEI is not redeemable for $ETH. So $TRIBE holders can allow $FEI holders to exit now or see the sell pressure continue for months. In the second scenario, the protocol may capture more value. But the faith in the project by market participants will obviously be non existent and $TRIBE will lose all its value. The most rational thing to do for $TRIBE holders is to allow $FEI holders to exit and vote for a revamped system that actually incorporates a price floor and a price cap, which is the only way a stablecoin can work.

My proposal is the following : $FEI holders can redeem 0.95 dollar worth of $ETH for 1 FEI. That means the protocol PCV will not be completely drained even if all $FEI holders decided to sell and the protocol could restart on healthy grounds.

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This would be obviously bad for TRIBE holders and preswappers.

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I don’t know if that is obvious, the protocol would be buying $1.01 for .95 which is a 6c return per FEI. Maybe the sell pressure relief would allow FEI to eventually float back to the peg and TRIBE could then have value as being a real protocol’s governance token.

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I do not support this for reasons I outline here: Achieve Peg & Appease Both $TRIBE Pre-Swappers & $FEI Sellers (summary + my 0.02 FEI) - #9 by DeFinder

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Noway you can sell fei on CEX.

This is irrelevant, if the launch was a success and tribe was shooting to the moon I don’t think that tribe holders would like to share their gain with other participants in the protocol. The only goal should be to get back close to peg and start on a healthy base so that the project can move forward. In the long run this is also the best option for tribe holders provided that they’re not in for a quick swap.

Calling the experiment dead on arrival, shit happens.
Now best return all investments to the wallets. Definitely DO NOT pay yourselves (founders).
Start anew or get rich rug pulling us all and assume the consequences.

$0.95 is way too much for winding down the project. 75c on the dollar for FEI might be a good compromise. As you said no FEI leaves unless approved by Tribe, so that puts Tribe in the power position.

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I am a Tribe holder, but selling Fei for 0.75 is greedy for Tribe holders. The PCV is already overcollaterized. Why purnish Fei holders more? You can as well sell Fei for 0.25

It’s not greed to believe a lower exit price is more fair. Why should FEI holders get 100% of their money back out while TRIBE owners are left holding the bag for who knows how long, at very high risk? No one would be forcing them to sell at 0.75 if they want to wait for .90 (their approx. break even point if Tribe has any value). It just provides relief for people who urgently want their capital back.

$0.95 would actually give FEI holders a profit if they convert their TRIBE to FEI before leaving…at the remaining TRIBE-holders’ expense..

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Because the one and only goal should be to get back the system to in a working state and that goes through getting to the peg. We should not undermine that because tribe holders like to see a big number on their zapper especially if they are in for the long haul. If we put the buyback at 90% we’re still at 10% from peg and fei is still not a usable stablecoin.

Because FEI is supposed to be a stable coin, there was an implied promise that the price of FEI will be 1 USD, not more not less. There was no such thing for TRIBE as it is a governance token and its price is purely speculative. When you have purchased TRIBE you have taken a risk, now you have to live with it. Purchasing stable coins, on the other hand, in crypto is a way of reducing risk. So it is waaaay more unfair to investors that the price of FEI is off the peg than the fact that TRIBE is dipping.

Why not let FEI users redeem $1 worth of ETH for 1 FEI? That’s the promise they were given when they started using the system. It’s not FEI users fault the system broke and the team shutdown the pegging mechanisms (even though they could do manual reweights to continue the peg). The system was changed on FEI users in the blink of an eye - no warning. Now they’re effectively locked in the system as if it’s a jail.

TRIBE holders, and the PCV would be left with $200 million - is that not enough to continue this project off?!? It’s a win-win - let all the tired, frustrated, angry early adopter users leave the system happy and content in how the community managed this crisis AND realize a $200 million profit in less than a week (that was made from the skin off the backs of FEI users). Who knows, with proper management and leadership from the team, many FEI users will likely return and trust will be restored in this project.

The difference between FEI users and TRIBE holders is FEI is the product, and TRIBE are the owners and ones who benefit from users in the system. FEI users weren’t gambling on some crazy 10x expectation of increased value of their investment. They were trying to use a stablecoin product with no upside.

That’s why the risk should fall on the fiduciaries of the protocol - the people who actually benefit and earn money from revenue this protocol does. They have all the upside, that is the downside (accepting risk in system failure). Without acting as a backstop to stabilize the product, TRIBE has zero value.

Also, even at a $1 redemption of FEI, the PCV would be left with $200 million - is that not enough to continue this project off? Be happy that your business made $200 million in less than a week, and let the people it gauged to make that money, out of the jail you’ve put them in. Do you really want to burn bridges with all the early users of your product? Especially when it’s a win-win (FEI honored at fair value, TRIBE gains $200 million). Sizing down the PCV will actually help the project stabilize - huge mistake to no-cap and let it go run to crazy numbers in an experimental (and clearly not well tested) economic game theory.

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The project is currently in a failed state and the initial project is not guaranteed to be stable. Did they promise 100% a 1 dollar? As you say, TRIBE has risks. TRIBE are losing more than 50% of money. Can we make all the decisions for TRIBE in the future?

Keep discussion relevant. This is an interesting proposal, however I think I support the idea of voting for a fraction of the PCV to be used in something like a yearn vault, with the proceeds going back to buying more FEI. This would assist in bringing the price up to the peg.

I disagree, it is more likely that most people that took part in Genesis whether they bought Tribe or FEI did so to make a profit. I doubt any FEI genesis participants “were trying to use a stable coin” which is clearly experimental and has no integrations within the current DeFi ecosystem. I would bet most FEI holders wanted free tribe but some were unwilling to take the additional risk of pre-swapping some or all of their FEI for it.

All participants took a risk and should therefore share it. FEI holders shouldn’t be trying to walk away with free Tribe and anything close to $1 FEI. If anyone is keen to get out, they could get out now with 0.84c (on a few cexes) on the dollar and free Tribe to boot.