FIP-104: Fei/PCV Reinforcement Proposal

22

Now that the snapshot has passed to take initial steps such as consolidating DPI, CREAM, and protocol owned liquidity like d3 into DAI, seems like it would be a good time to discuss an ETH sale.

By my reckoning, there is about 225m circulating user FEI and 135m in non-ETH PCV assets, meaning FEI backing is <40% liquid stablecoins even after the current action to consolidate PCV.

To bring the protocol up to the target 80+% stablecoin backing signaled in the poll, the PCV would need at least 180m in stablecoin holdings. A swap of ETH for ~50m DAI would greatly derisk the system while maintaining a very large ETH holding.

3 Likes
23

After internal discussion by the Tribal Council, we are divided on the question of how much (if any) ETH should be sold to derisk PCV. There is consensus that stable backing of the entire ā€œuser FEIā€ supply as currently calculated would be more than needed.

As a first step, I would appreciate help calculating a ā€œliquid FEIā€ supply that excludes:

  • FEI held by Tribe DAO
  • FEI held by FEI labs
  • vesting FEI from Genesis
  • FEI held by long term partners like Olympus, Frax, Volt, which can be considered substantially less likely to be redeemed vs FEI in incentivized liquidity pools, even if not explicitly locked.

Based on this new liquid FEI supply, here is a poll to assess community thoughts on an ETH sale. Targets are understood as estimates with some variance based on ETH price at time of sale and expansion or contraction in FEI supply.

This new FEI supply is probably already more than 50% stable backed, will appreciate help running the numbers on current % stable backing.

Should TRIBE DAO sell ETH to derisk the FEI backing?

  • No, donā€™t sell any ETH
  • Yes, sell enough ETH to back ~75% of ā€œliquid FEIā€
  • Yes, sell enough ETH to back ~100% of ā€œliquid FEIā€

0 voters

2 Likes
24

Hello and thank you for starting the proposal.

I think this begs the wider discussion of whether we should use any volatile assets as the substantial backing for FEI issuance. As it stands ETH is the primary backing asset for FEI and as we all know by now, anything can go to zero.

That said, do we and should we consider a system where we need a stablecoin 1:1 or even overcollateralize this (eg we must have enough DAI to cover all outstanding FEI supply or even more than 1 DAI or some basket of other stable)?