Those who participated in preswap suffered huge losses. No compensation was received in this proposal. what are you thinking?
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So PCV reduced to ~300M, close to what it should have been @ 250M if capped. But TRIBE holders received not even 20% of what they should have if the cap was in place.
TRIBE Received per ETH for 100% pre-swap = 782.47
TRIBE Received per ETH for 100% pre-swap (if cap was at 300M as you suggest reducing the PCV to) = 3403.33
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I remember saying at least 2/4 of the Fei DAO Treasury
So this is basically a way out for all those people that bought FEI to then dump everything against the price they bought it for and get free TRIBE as a bonus.
These people will be lose some money with this proposal (5%), meaning in the end they will have paid for the TRIBE airdrop, like those who pre-swapped 100%.
But will they be paying a similar price to what the 100% pre-swappers have paid? Imo they should at least pay that price. Then it’ll be a fine solution.
The extra 100 million TRIBE is a weird reward in my opinion. Why reward those who are staking TRIBE with even more TRIBE? They are already getting rewards from the staking, right? This does injustice to those who did a 100% pre-swap.
The ones who are here for the staking rewards are rewarded generously, while those with the 100% pre-swap get nothing, while they actually bought 100% into the protocol.
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It’s elegant that we can improve the alignment of FEI and TRIBE holders’ incentives by adding a single command in the code.
I’m open to lowering the amount of ETH allocated and including reweights in this single proposal.
I think this is a good idea. Even if reweights are set to kick in after the redemption window closes, many people will wait for reweights rather than redeem at 0.95. It’s even possible that the price goes above 0.95 in anticipation of the reweights, and little redemption takes place, if at all.
I am not sure if there will be additional benefits to having the reweights kick in at the same time as the redemption, rather than after. Is it correct to say that if reweights and redemption are combined into a single proposal, then once the DAO vote passes, the protocol code will be modified at the same time so that redemption is set to take place on say 5/1 - 5/3 and reweights are set to kick in on 5/5? As long as both modifications to the code are made at the same time, the timing of execution may not matter much.
So far, I assumed that the reweight window will close at some point. If you keep the redemption option open indefinitely as @Eswak suggests, I guess reweights and redemption will end up co-existing. As long as the technical details can be sorted out, I don’t think this will cause economic problems.
Can you please elaborate on this? Would this mean that the redemption is simply a mechanism to put a price floor on the cost of FEI?
The redemption window would be open as long as ETH remains in the stabilizer. I think waiting until the redemptions are up to see how much ETH remains will be good so we can potentially reallocate it in the following proposal with the reweights
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Good point. It does end up being something like that, assuming reweights work well. But perhaps reweights will kick in after redemption is over, as Joey just said above.
I think waiting until the redemptions are up to see how much ETH remains will be good so we can potentially reallocate it in the following proposal with the reweights
@joey This sounds good. We could have more liquidity that way. I think it would be nice if the reweight could be voted on at the same time as the redemption. The vote could include the part about reallocating the remaining ETH to reweights. Maybe this is what you meant.
Ehhhhhh! 
I knew this thread would sublimate as soon as you joined!
I will be voting for this proposal as well. There are two reasons why a $0.95 faucet is advantageous. You lay out both of them clearly, and I’ll repeat them here for the luckless many that might’ve missed your comment:
The decision to lump the $0.95 faucet with increased staking rewards is interesting. I do differ with you in that I think it makes the proposal much stronger. I’ll try to explain why.
First I’ll acknowledge it’s obvious drawbacks:
(1) spending 25% of the DAO so early is unadvisable. The less TRIBE in the DAO, the less power the DAO has to incentivize actors to act in the interest of the protocol. I’d go as far as saying that, even though DAO TRIBE isn’t technically what we’ve been calling PCV, spending 100 million tribe on this proposal is like spending $130,000,000 in PCV on top of the 300,000 ETH. And that’s without considering the likely appreciation of that TRIBE over time. Moreover, it seems at first sight that it’s not politically necessary. Reducing the faucet from $1 to $0.95 and spending the team’s votes in favor of the proposal is likely all we need to flip the vote against FIP-1 to a vote in favor if FIP-2.
(2) It is devastating for bags that only hold TRIBE. I’ve seen many of the users that I most respect suggest that this is not as bad for 0/100 FEI/TRIBE bags as it seems. And I definitely hope that we find an avenue that allows them to partake in the staking rewards with a position that’s not much worse than the one they’d have had they staked from the get go. But there’s no doubt that this proposal sends a clear message to 0/100 FEI/TRIBE bags: “you don’t have the voting power you thought you did, and the team will not cater to your interests. In fact, we’ll favor decisions that are actively disadvantageous to you.” Yes, the price of TRIBE might go up as demand to stake increases. Yes, 0/100 FEI/TRIBE can take out gassy FEI loans with some of their TRIBE as collateral and stake what FEI and TRIBE the have left afterwards. But let’s be honest: these are just afterthoughts. And I’m not convinced that either of these mechanisms will correct the disadvantage.
So why do I think that staking rewards strengthen this proposal? After all, my bag is 0/100 FEI/TRIBE!
It comes down to a flaw in the protocol’s design that only really came to light during the debates over FIP-1. The primary incentive of 0/100 FEI/TRIBE bags is to grow the PCV. Keeping FEI pegged at $1 is only one way to achieve this. Needless to say, this is an undesirable quality for a token that’s meant to make decisions that keep FEI pegged at $1. At the moment, the only barrier to the FEI protocol becoming a hedge fund that completely disregards FEI’s peg is the team’s conscience.
So yes, this proposal is devastating for 0/100 FEI/TRIBE bags. But that’s exactly what the protocol needs. For if a large proportion of bags were 50/50 FEI/TRIBE, then governance’s incentives would be more aligned with the stability of the peg. That would allow us to envision a future where the team doesn’t have to bias votes just to have some hope that the right proposals will pass.
Because of this, I expect we’ll see more and more proposals that favor 100/0 and 50/50 FEI/TRIBE bags and disregard, or even punish, 0/100 FEI/TRIBE bags. For those of us that hold 0/100 FEI/TRIBE bags, we have two options: (1) we can complain to our hearts content and follow the toxic example that 100/0 FEI/TRIBE bags have set over the last couple of weeks, ride the precedent that the team is labile to our shortsighted feelings and threats, bring about an indefinite gridlock that punishes everyone, divides us further, and all but guarantees feilure; or (2) we can accept our predicament, realize that the future of effective governance is in the hands of stakers, and figure out how to minimize our losses as we shift our bags towards 50/50 FEI/TRIBE.
I’ll be opting for option (2). I’m here for the long term; I can afford some short term losses. I imagine most everyone else with 0/100 FEI/TRIBE bags is in a similar position.
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This Project will go down in history as a project that started with a capital of 2+ billion dollars and squandered away most of its.
In real world these are insane figures.
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@fei.saver @joey I like the idea of time limited redemption before re-weight starts. After bug fixing and flaws like unlocked airdrops eliminated by redemption none or a more restricted incentives might be worth for consideration.
We are not in the same boat. Only one of us can vote. I never once mentioned the word “justice”. Everybody has a duty to maximize their own value, no more or less. This is not some utopia, this is life.
For the record, I see reaching ~$1 peg as the best way for TRIBE holders to realize value. However, I believe that this proposal would generate a lot more support from TRIBE holders (the only people with any voting power) if we could find a way to make some of the 100mm TRIBE staking benefit more accessible to them.
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I would second this. I think combining the .95 redemption proposal with the 4 hr reweight proposal makes the most sense. Knowing with certainty that reweights will kick in will minimize the amount of ETH that will be paid out from the stabilizer. FEI holders and arbitrageurs will know that they can exchange FEI for ETH at anywhere between .95 to $1.00 and this will reduce the # of people looking to sell their FEI through the stabilizer. Nevertheless, there will be some takers (those who are most anxious to get out) and so this helps reduce the heaviest sell pressure at a beneficial exchange rate for the PCV. Once the most urgent sell pressure is relieved, the remaining FEI sellers will be willing to sell to arbitrageurs between .95 and $1 and the price will stabilize close to $1 so that each reweight does not require much expenditure from the PCV.
If, on the other hand, we wait until after this proposal to put up a new proposal for the reweights, more FEI holders will redeem at .95 from the stabilizer because of the uncertainty about whether they will ever be able to sell above .95. While this is at a beneficial exchange rate for the PCV, the amount of ETH sold through the stabilizer will be higher and would likely result in a lower PCV at the end than if we had combined the reweight proposal with the redemption proposal.
On the other point, if there’s ETH remaining in the stabilizer, can’t we just leave it there as a price floor? It seems to me that it works best as a price floor in the near future while the reweights are acting to push the price closer to $1. Once the price is stabilized, we can determine through a future proposal what to do with the remaining ETH and whether to modify the stabilizer as appropriate (e.g., reduce the amount of ETH in the stabilizer based on collaterization ratio, have a dynamic exchange rate based on the same, remove the ETH from the stabilizer, etc.).
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This was outlined in the OpenZeppelin audit (Fei Protocol Audit - OpenZeppelin blog) and what I believed too. However, it was changed between the audit and the Genesis announcement (Fei Protocol Genesis Group. Launch details for the decentralized… | by Fei Labs | Fei Protocol | Medium) so the team did not lie or whatever. However, I do wish they had stuck with the original plan and not raised so much.
I am totally against this proposal.
Let’s use these 300K ETH to buy back Tribe tokens and burn them.
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@AliG I want to emphasize that my key point is that incentivizing 0/100 FEI/TRIBE holders to move towards staking is perhaps the best aspect of this proposal.
My incentives to hold a 0/100 FEI/TRIBE bag were to participate in governance. In hindsight, that was a mistake. One the one hand, we had all the information we needed to know that in the early stages of the development of the protocol, the team would have a very strong vote. And that’s for the better. They understand the protocol far better than the rest of us. I’ve said a lot of shit on this forum but the truth is I haven’t spent a single hour reading the contracts! On the other hand, we didn’t understand that 0/100 FEI/TRIBE bags don’t have the ideal incentives for a governing body. I don’t think anybody predicted this. At least not anybody I know. But looking back it’s obvious.
So I’ve reassessed. What were my most basic intentions? To accrue value on an asset by participating in the governing community of a stable coin.
It is now becoming clear to me that 0/100 FEI/TRIBE bags are not the most effective way to achieve that goal.
I know that there are grievances. That’s why I explained them carefully in my first comment. But my overarching point is that engaging in revisionism and campaigning for reparations is only going to hurt us more. Don’t we wish that this is what people that lost money on FEI had done? Let’s please do that ourselves.
Put this way, it does make a lot of sense 
I’d say : deploy what’s ready as soon as possible. One offers an “emergency exit” / lower boundary to FEI price, the other is a first step to get closer to peg. I don’t see obvious problems having them deployed asynchronously. It’s also better for PCV if some FEI exit for .95$ of ETH than for .98$ after a reweight. Only the team knows the expected timeline for the “fixed cadence reweights” feature, so it’s your call whether it’s worth delaying FIP-2 to wait for it or not 
@joey, could you share with us the thoughts the team had about the interaction between sniping bots, EthReserveStabilizer & EthPCVDripper, and regular reweights (without DI first, then with DI) ? It seems to me that one of the biggest problems after launch (besides reweights being rarely triggered & the vulnerability around minting) was that sniping bots instantly pushed back the FEI price below peg & collected all the profits from the protocol injecting ETH to restore the peg. Maybe that problem disappears with frequent reweights (there’s less and less underpeg FEI to buy for bots to dump on the next round), I need to think more about it, but the team sharing their insights about that would be nice, since it’s not obvious this problem will be addressed by the proposed changes.
I understood what your point was very well, and i used the quoted section to communicate mine. And we actually (somewhat) end up at the same spot. Lets move on to peg.
TLDR for my message above if it was unclear: The quoted section was my most basic intentions too. Until i realised there is no weight of vote for tribe, no voice in the governance and this dao is a smoke & mirror show. Now i care about surviving despite the intentional & systematic flaws of owning tribe. And have zero interest in wasting time producing opinions for the greater good of the project until project shows a sign to earn back the trust they are losing.
The point is to get more people get FEI
Arbitrage in some form is a necessary component for maintaining stablecoin pegs. This is the theory behind reweights. A trader can estimate the amount of selling demand for FEI and the time until the next reweight in which they could exit at a profit. They then buy FEI supporting the peg in anticipation of that profit. There is competition here obviously so assuming the reweights are frequent enough then the optimal strategy is to always support the peg to at least the minDistanceToReweight currently 1%.
This was one of the large problems I see with the reweight algorithm from the whitepaper. It is non-deterministic and almost requires ETH volatility to push the oracle into the range the reweight could actually execute (incentive parity).
I think fixed cadence reweights will solve this, although bot sniping will be commonplace until we are comfortably sitting within the .99-1.01 range. Ideally this wouldn’t take much more than a week or so after FIP-2. This to me is a necessary cost of the mechanism in its current form. The $.95 peg support is crucial to minimizing this bot sniping as it basically frontloads it all to traders arbitraging this vote. If the peg is to be restored, ultimately anyone buying below $1 is making a profit.
Regarding direct incentives, I think they will also operate more smoothly within an effective 5% spread. As you mentioned:
However I think the market price expected is closer to 1.8% + (1.8%)^2 ~ 5%. Then again people can be selling below this without the buy support if the spread is higher before the mint reward kicks in.
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