Sounds good, however we need to include circulating TRIBE as well. For example offer TRIBE = 2 FEI, we should end up less than $1 for each FEI. Not possible to be over $1, should be around $0.9
Iāll just paste this extract from the whitepaper :
The key innovation behind the Fei Protocolās mechanism is the idea of āProtocol ControlledValue (PCV)ā, a subset of TVL in which the protocol outright owns the assets with no IOU.
Why would TRIBE (not even mentioning Fei Labs & investors) vote to give away money they control & donāt owe to anyone ?
Of course itās immoral for TRIBE holders to scam the FEI holders, and itās stupid for the future of the project. The best they can do is to deliver on their promise of building a stablecoin & allow people to exit [insert let me out meme].
Surely you are a smart person with a good undrestanding of DeFi, and I would love to get your feedback on my proposal for a mechanism to restore the peg.
With the bad situation created by the launch, a lot of PCV will bleed out, but letting people exit at close to the peg (i.e. making FEI properly stable) is the fair way to go, and the only win-win situation, in my opinion. Could even be an exit at lower than the peg, as all FEI buyers got a 10% bonus of TRIBE already.
7 Likes
A solution that is as fair to tribe preswappers as it is to fei holders would give each tribe holder 3.25 FEI. There are about 144M tribe in circulation. That means that the effective pool of fei for your proposal to be politically viable is, at the moment, more than 796M + 3.25*144M = 1.264B. From this perspective, the real collaterilization ratio if we choose to use PCV as collateral is 975M / 1.264 B = 77%. Barring magic (or long term accrual of interest), that determines the actual price of fei in the case of an exit strategy: 77 cents.
Note that this is worse than the current market price.
If youāre a fei holder and you want out you have a few options. (1) sell it on the AMM at 78 cents and quickly compromise the ability of other fei holders to sell at that price; (2) implement an exit strategy like the one proposed by banteg but with edits that make it politically viable and get 77 cents in the best case scenario; (3) wait for the team and community to stabilize fei at $1 and eventually sell your fei for $1; (4) trade your fei for tribe and expose yourself to the upside of holding governance power when the protocol reaches stability.
Unfortunately, selling at $1 effectively immediately is not an option.
Itās also worth noting that bantegās proposal funnels a billion dollars of fees through yearn. I donāt know how the fee system works on yearn, but I imagine thereās a lot of money to be made by handling a $1B transaction and the 17k withdrawals of individual genesis participants. If Iām wrong that thereās money to be made, thereās at least a tremendous marketing boom that will follow once the yearn protocol handles likely the largest transaction in its history. Thereās nothing wrong with that if yearnās used to solve a genuine problem. But at the moment any politically viable short term exit plan would represent a 23% loss on average for the group of genesis investors. We should be skeptical of any proposal in which the fei community takes losses and bantegās yearn community takes profits. Of course, what Iām saying wouldnāt apply if my calculations are wrong and thereās a way to organize this so that thereās a short term win win.
7 Likes
support
support
support
In the current circumstances, the proposal looks good, I support
This is literally bailing TRIBE holders out at its IDO price. However, IDO participants could have had the upside potential if the project becomes a big success, and in return they should bear greater risk than FEI holders whoās upside is very limited.
I do not support. Itās still so early in this project.
I support with the amendment that FEI is redeemable for $1 of ETH.
I would also support an additional TRIBE airdrop for holders and preswappers.
I believe the combination of these two ideas does a good job of keeping PCV/protocol equity, upside for TRIBE supporters, and safety for all via reducing the size of the experiment in its early days.
I also want to highlight that restoring the peg vs offering direct redemption at $1 are functionally equivalent. With restored peg, the people who would take the redemption option will simply sell @ peg and the PCV will decrease anyway. Itās time for everyone to face that reality and focus on safety over all. Itās also important to recognize that it can takes several weeks or more to restore the peg via code and get it properly audited, whereas a vanilla redemption option at a fixed rate is a lot simpler/faster. No one will feel that their ETH is held hostage. The longer the ETH is stuck, the more it is exposed to ETH volatility in both directions.
Ability to sell FEI @ very close to $1 was always intended behavior: the raison dāetre of making a dollar-pegged stablecoin.
3 Likes
Actually, it benefits people who tried to use the TRIBE product - the stablecoin named FEI, which ultimately has failed and locked their capital captive in the system. It doesnāt even have any of its pegging mechanisms live.
There is no timeline in sight to turn them back on - what does this mean? It means any early adopters of FEI are literally locked in the system with no end in sight, where the system they were promised theyāre using has been changed under them (no governance vote) - how is that fair?
The team is refusing to use reweights to re-peg and let users exit (which benefits the PCV by the way), so this is the only path left for us. I thank banteg for putting this initial draft together and volunteering to code up proposals for changes.
The TRIBE token is worthless if their product [FEI] doesnāt work. Iām a TRIBE holder, as well as an unfortunate FEI holder. Iām happy to continue this project with the value left over from doing a payback of FEI $1 which is $200 million - not sure why TRIBE holders are unhappy with that. This protocol has managed to make $200 million within one weekā¦ be content with that and let the people this system screwed to make all that money exit now if you have any decency.
3 Likes
Well yes. Thatās what Iām saying. If weāll be bailing out FEI holders at the genesis price, itās only fair bail out TRIBE holders at the IDO price. I understand that the upside potential of IDO participants is greater than it was for FEI holders. In fact, after we had invested 250,000,000 everyone participating shouldāve known that keeping FEI was a net risk with no potential to earn any money. Iām not sure why anyone that wasnāt intending to provide liquidity would have kept FEI. Of course, some people were planning to dump the airdrop. And we shouldnāt reward those people by bailing them out. After all, the upside they were betting on was at least 10% return in a matter of hours. The return, per minute, of that scheme, for those that it worked for, is way greater than what any TRIBE holder could hope for. The claim that the upside for FEI holders is very limited sounds right. But it doesnāt hold under inspection.
I know Iām repeating myself at this point: if youāre a fei holder and want to expose yourself to the upside of a tribe valuation, buy tribe. Itās the cheapest itās ever been; you get a much better deal than any preswappers did.
If instead, youāre a fei holder and you want out, donāt expect TRIBE holders to bail you out and tremendously devalue their own investment. Iāll phrase what youāre demanding as it sounds to me and likely to other TRIBE holders:
āI thought I could participate in genesis, dump my TRIBE airdrop, and sell all my FEI for a dollar. It seemed like a great idea. I was going to make at least 10% on my investment in a matter of hours. But it didnāt turn out very well for me because people with more capital than me dumped before I was able to. Now it looks like if I try to get out, even after dumping all my tribe, Iām still at a loss. Itās not fair that I risked my money for a quick buck at the expense of TRIBE HOLDERS and instead lost my money. Will you, Mr. TRIBE HOLDER, please incur a greater loss than you already have, just in order to bail me out? It would be very kind of you. Of course, what you get from this deal is that weāll stop trying to sabotage the project you so believe in.ā
5 Likes
Itās not functionally equivalent. If the peg is restored then faith in the protocol will be considerably greater than it is now. The sell pressure would be much lower.
(edited extensively after comment from Discord)
Letās begin by calculating the number of outstanding FEI and TRIBE tokens that can be redeemed.
First, the total supply of FEI according to Coinmarketcap is 2.041B. From this, we need to subtract the amount held by the PCV in the Uniswap FEI-ETH pool. Currently, the PCV holds 99.4% of the LP tokens in this pool. Since the pool has 1.249 B FEI tokens, the PCV holds 1.242B FEI.
We also have to subtract the non-vested FEI that is held by the team and investors inside the Uniswap TRIBE-FEI pool. The team and investors hold roughly 66.3% of the LP tokens from this pool. Only a tiny portion of vesting can have happened so far, so I will assume for simplicity that none of these 66.3% have been vested. The pool holds 290M FEI, so the team and investors hold 290 * .66 = 191M FEI.
Therefore, the outstanding number of FEI tokens is 2.041B - 1.242B - 191M = 608M. This is the amount of FEI that can be redeemed, if redeeming were to happen right now.
Next, we do the same thing for TRIBE. The total supply according to Coinmarketcap is 248M. The TRIBE-FEI pool holds 166M TRIBE. Again assuming that 66.3% of these have not been vested yet, we obtain 166M * 0.66 = 101M tokens that cannot be redeemed. Therefore, the outstanding number of TRIBE tokens is 248M - 101M = 147M.
Now, the question is, do we have enough ETH in the PCV to redeem 608M FEI and 147M TRIBE? The answer is yes.
PCV holds roughly 983M in ETH. If we redeem FEI at $1 each, that leaves us 983M - 608M = 375M. So each TRIBE token can redeem for (or control) 375/147 = 2.55 dollars.
At first glance, this may seem unfair because people bought TRIBE at around $3.25 (not sure about this number right now, correct me if Iām wrong). But remember that out of 220M TRIBE that was minted in Genesis, only 120M was bought at $3.25. The other 100M were airdropped at $0. So the average price that people paid for TRIBE is 3.25 * 120M / (120M+100M) = 1.77 dollars. By redeeming TRIBE at $2.55, they are making a (2.55-1.77)/1.77 = 44% profit.
Intuitively, it has to be the case that TRIBE holders can profit while FEI holders redeem at $1 (or even at $1.01). During Genesis, people paid $1.01 for FEI and $3.25 for TRIBE. After Genesis, people who exited sold FEI and TRIBE to the pool at lower prices. So the pool made money, and they can be distributed to us. (Note that this is assuming that no tokens have been vested to team/investors and sold in the days since Genesis. But since vesting is linear, the amount should not be too large.)
Please let me know if you see spot any errors.
3 Likes
Wrong. Only pre-swapped tribe should be included for FEI-equivalence calculation. That will be far less than the circulating Tribe. Hence, the PCV should be almost collateralised at FEI=1USD at least if not more. Non pre-swapped Tribe in circulation is just a bonus for participating in the Genesis and need not be included in the scheme.
Hmm. Yes I just took the āUser Circulating FEIā on the analytics page. It does seem from what youāre saying that a better figure might be 508 M. Thatās when we exclude the FEI in the TRIBE-FEI pool.
I see your point about what the average price for tribe was. If you count all of the tribe that was minted and distributed to users, the average price is indeed 1.77. However I donāt think that thatās the number that will appeal to the tribe community. Looking at the liquidity left in the FEI-Tribe pool, it looks like around 80,000,000 Tribe has been exchanged for FEI. Presumably, much of that is dumped airdrop Tribe. That represents the profit that many FEI-holders have already made. Once we buy their FEI for a dollar, weāll essentially be letting FEI-holders profit off of the backs of Tribe preswappers. Given that most of them sold above 1.77, theyād be leaving the system with more than a 10% profit, if my understanding is correct. Preswappers, on the other hand, will be given a chance to leave with a 50% loss.
Perhaps a fairer calculation, responding to ParamaShivaās comment, is to somehow identity all of the preswapped tribe and offer them as many fei as would be needed for them to exit with as much profit as the fei holders that have been recking the system with incessant sell pressure. That would mean giving each preswapper 3.25*1.1 = 3.575 FEI for every Tribe they preswapped. Even in this case I think youāre right that with the correct amount of circulating fei, weād be able to sell each FEI for around a dollar, but the PCV would be essentially spent afterwards.
I say that because the portion of PCV to effective FEI in that situation would be
971/(508 + 3.251.1120) = 1.03
Itās not a pretty picture for what would remain of the protocol, but at least it wouldnāt leave an enraged community of preswappers. Again, itās likely that for any vote to pass it will need the community of preswappers, which might represent as much as 120/144 = 83% of the Tribe community. Those odds are worse than trying to win a US election without addressing the concerns of Christians.
In any case, thank you for pointing out the mistakes in my calculation.
1 Like
I responded to this in the middle of the above post. I think youāre right that we need to calculate only the preswapped tribe. I incorporated in the new calculation above. Itās not as bad as 77 cents. But it would leave nothing for the protocol.
I agree, we might end up spending most of the PCV if everyone exists. But if everyone exists, I think we should spend everything, since no one will be left to control the PCV! If some people choose to stay, they would be left with an amount of PCV that corresponds to their holdings.
1 Like
I support this proposal.
That seems right. I still hope we opt for something other than an exit strategy. But I do think any politically viable exit strategy needs to be more like what weāve in the last couple of hours than like what Banteg proposed. Frankly, I still donāt understand the purpose of putting it in a yearn vault to execute the exit. But Iām out of my depth there because I have a very basic understanding of what a yearn vault is.
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I think banteg intended this as a first draft and expected people to update to include TRIBE holders.
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What I said here was wrong. I do think what fei.saver had posted that heās now removed was right. What he proposed effectively returned 125% of the investment to anyone that stood still. The calculation I made before made the mistake of assuming preswappers bought at 3.24. Really they bought at 2.60. And so theyād get the very same 25% upside.
Sorry for creating that confusion Fei.Saver