Bonding curves are the main way that new FEI enters circulation. They are also one of the main ways that the Fei PCV increases in size (the others being asset appreciation and yield farming). Bonding curves are a foundational mechanism that allow the protocol to grow.
The way that Fei bonding curves work is that each bonding curve uses a specific asset (e.g. ETH, DAI, or RAI). Users can acquire FEI off of a bonding curve using that asset. Bonding curves sell FEI at either a discount or a premium depending on whether the amount of FEI issued by that bonding curve is below or above a scale parameter. Each bonding curve has its own scale, discount, and premium parameters. Each bonding curve also has a cap parameter on the total amount of FEI it can issue.
This table gives a summary of the current Fei bonding curves:
At present, all of the bonding curves except ETH have reached their cap. The caps should be raised for them to continue issuing FEI and growing the PCV.
We propose a series of changes to the bonding curves to help increase the amount of circulating FEI and grow the PCV:
- Modify ETH bonding curve: premium 0.5%
- Modify DAI bonding curve: scale 100M, cap 150M, discount 0.0%
- Modify DPI bonding curve: cap to 50M, discount 0.0%
- Modify RAI bonding curve: cap to 20M
A summary of previous bonding curve activity can also be found in this dashboard: Dune Analytics
Please share any thoughts on the above changes.