FIP-2 FEI Redemption + TRIBE staking

EDIT: 4-24 adding the DAO timeline and implementation details for the contracts

This proposal aims to unify FEI and TRIBE holders around the common goal of FEI’s long-term stability and success by:

  • Offering $0.95 redemption of FEI using 300k ETH from PCV delivered in batches to the ReserveStabilizer contract
  • Doubling staking rewards by allocating 100 million TRIBE (1/4 of the Fei DAO Treasury) to the existing FEI-TRIBE staking pool, linearly decreasing over two years

Motivation

This proposal is designed to reduce the post-Genesis sell pressure on FEI. The purpose is to move FEI closer to the peg while the fixes to the direct incentives mechanism are audited. The current level of sell pressure should be addressed to enhance stability, while the protocol has a healthy amount of PCV in its current state. TRIBE voting to bring FEI up to $0.95 will restore confidence in FEI’s peg and the community behind it.

This proposal strikes a balance between the effective exchange rate of the “simplified undo button” proposal and $1 redemption for FEI. Reweights can operate more efficiently with a smaller gap to close in the subsequent proposal.

The allocation of an additional 100 million TRIBE from the DAO Treasury to staking rewards is an essential part of this proposal with dual objectives. First, it offers TRIBE holders who believe in the long-term potential of the project a way to significantly increase their stake in it. Second, it generates demand for FEI, which will help support the peg and retain PCV.

The core team will vote for this proposal. It balances the interests of FEI and TRIBE holders, while being simple enough to implement in a safe and expedient manner. We are finalizing the code and will have it reviewed by multiple security researchers and smart contract engineers during the snapshot vote.

Advantages:

  • Reduce sell pressure on FEI
  • Allows room for mechanisms to operate with a floor of $0.95
  • Creates demand for FEI through staking rewards
  • Incentivizes TRIBE holders for supporting FEI-TRIBE liquidity
  • Equal opportunity of exit price compared to reweight-based peg restoration
  • Increases the collateralization ratio

What happens after FIP-2?

After FIP-2 is voted on, the plan is to reinstate the incentives system with the following steps:

  • Re-enable reweights with a fixed cadence (e.g. every 4 hours)
  • Complete the audit on proposed fixes for direct incentives, including a vote on new DI parameters, and then reinstate them
  • Deep integration of FEI into DeFi and diversification of PCV by deploying it productively to support the peg

After incentives are in place, we are excited about the possibilities that are available through generalized PCV deployment. A sufficient amount will remain as liquidity, while the DAO could allocate the rest to things like financing interest rates on lending markets and deploying to yield platforms to increase the PCV.

Timeline

  • Snapshot voting will start on Wednesday, April 21 at 4pm PST, and last for 48 hours.
  • DAO submission Monday, April 26 at 12pm PST lasting for 3333 blocks (~12 hours)
  • DAO voting begins after timelock lasting for 10000 blocks (~36 hours)
  • If passed, timelock for implementation begins Wednesday, April 28 around 12pm PST lasting 24 hours
  • Redemption is live around 12pm PST Thursday, April 29
  • Increased staking rewards begin Monday, May 3

Implementation

The 3 contracts on this branch FIP-2 by Joeysantoro · Pull Request #95 · fei-protocol/fei-protocol-core · GitHub will be deployed to mainnet before the DAO vote.

EthReserveStabilizer

Exchanges FEI for ETH at $0.95

It is granted the Burner role so it can exchange FEI without a separate approval transaction

EthPCVDripper

Sends 5k ETH per hour to EthReserveStabilizer
If the EthReserveStabilizer has at least 5k ETH it will not drip. This helps prevent against oracle attacks by not leaving too much ETH in the stabilizer

TribeDripper

When the FeiRewardsDistributor receives new TRIBE, it allocates an amount proportional to all prior drips to the very first drip, frontloading the distribution. If the 100 million TRIBE are sent directly to the distributor then the following week would have 6x rewards (1x base rewards + 100% boost x 5 drips).

To smoothen out the front-loading, the TribeDripper sends the 100 million TRIBE to the FeiRewardsDistributor over 3 weeks using 47m, 31m, and 22m TRIBE respectively.

Week 1: 1x base rewards + 47% boost x 5 drips = ~3.35x
Week 2: 1.47x base rewards + 31% x 6 drips = ~3.33x
Week 3: 1.78x base rewards + 22% x 7 drips = ~3.32x
Week 4+: 2x base rewards

33 Likes

Does this means anyone can buy now at lower price and sell at 95 cents ?

:heart_eyes: :rocket: :rocket: :rocket: :rocket:

5 Likes

Increased staking rewards does nothing for TRIBE holders who pre-swapped 100% since they have NO FEI. This essentially means they need to double down now by buying FEI with more of their ETH when they already got royally screwed on the pre-swap amount. While FEI holders sold their TRIBE they got which diluted pre-swappers stake and get to cash out their FEI. I did intend to hold my TRIBE but nothing so far has given me confidence enough to double down.

40 Likes

A good start towards bringing FEI back to peg.

6 Likes

So basically burning 300k eth for this failed thing, crying in Vitalik.
This will only work if after we bring up FEI up to $0.95 the confidence is restored, we asume it will be, but given how things are now, who knows? We can go back down, and then? Another proposal to burn another 300k ETH?

2 Likes

What are supposed to do people like me that pre swapped 100% to TRIBE? sell now ad take a 66% loss in order to get 50% FEI and enter the pool FEI-TRIBE? It is not our fault that the protocol does not work and thus TRIBE price is low. 3 Days to make this proposal, crazy.

20 Likes

They are temporary solutions not definitive, so far I do not see anything that restores the confidence of investors in the long term

1 Like

That is the upper bound. The redemption is optional. Many people would prefer to sell at $0.99-$1.00 after reweights.

I vote no. This does nothing to allow TRIBE holders out, while meanwhile proposing to dilute supply further.

17 Likes

So this is same proposal as before to sell for 0.95c per fei, but TRIBE stakers get some TRIBE rewards for staking?

I don’t like it, I like the project but as someone who only holds TRIBE it means i must buy FEI now when there is better opportunities

does it also mean i must buy more FEI the TRIBE to stake to prevent IL ?

8 Likes

Agreed. Still holding and feel worse off than fei holders and farmers. Proposal doesn’t seem to reward tribe holders directly but rather indirectly by suggesting we should agree for the greater good and success of proposal therefore giving tribe more value - assuming this proposal is successful.

Perhaps better to propose the new peg price to be 80c so we could all just move on…

2 Likes

it’s gone it’s all gone

So what I’m getting with 100% preswap is more dilution?

6 Likes

Supporting the adjustments that are and will be made to the protocol so your TRIBE takes some value.

Agree.
Maybe if the staking for the additional $100M TRIBE was distributed by only staking TRIBE it would be more fair?
Could the protocol find any use for that non-LP staking?

8 Likes

With a proposal like this, TRIBE will reach the peg before FEI.

Are you watching FEI chart? People are already massively buying FEI to sell it to you at 0.95$, of course they will, it’s free money!

The only thing you will achieve is to burn 300K ETH and once it dried up, the price will drop again. Restoring the peg through the incentive/penalty system is the only decent proposal…

Please use 3 ETH to get a 101 trading course, you will understand why your proposal doesn’t make any sense. You will save 297 ETH…

8 Likes

The FEI sold will be burned. Removed from the system. While 300k ETH may vanish, the system will gain minimum 5% for each burned FEI. In reality the system is overcollateralized so the gain is much higher. This will simply relieve sell pressure and increase the odds of a successful peg restoration. It’s expected that the ETH in PVC will have to decrease in order to take out the sell pressure, there’s no way around that if the project is going to restore the peg.

2 Likes

The Tribe rewards are released over a significant period of time, dilution may not be as huge as you think.

4 Likes


After reading the white paper and official reports I made a decision to invest in Tribe. As shown, the official report states that the ETH contributions to the PCV will be capped, but this is not something that the FEI team did and they collected more ETH than what was required. I would have never invested in Tribe knowing that they would not meet this commitment. The Fei protocol project is accountable for disclosing false information and misleading investors who invested in good faith. Now it is us Tribe holders that bootstrapped their project who are now suffering from significant losses due to their false disclosure of information. We should make the FEI team do the right thing and return the ETH to the tribe investors that contributed to the genesis.

15 Likes