FIP 34: FEI Minting for Optimistic Approval

proposal: FIP-34
stage: Last Call

Summary:

Grant optimistic approval the rate limited ability to mint FEI, to continue to fund DAO operations like FIP-13 lending deployments and potentially Liquidity-as-a-Service

Motivation:

As part of FIP-X, Optimistic approval was granted 50M FEI for FIP-13 lending deployments. To date it has used over 40M, and will need a refund soon.

Instead of continually going back to the DAO to ask for more funding, Fei Protocol can deploy a contract which allows the OA timelock to mint FEI periodically with a hard rate limit on the amount minted. These mintings will still be subject to the 4 day timelock, but would not require governance intervention.

Proposal:

Deploy a RateLimitedMinter for Optimistic Approval which can mint up to 100M FEI per month, for operational usage strictly to be authorized by TRIBE holders via snapshot. This includes frameworks such as FIP-13 and potentially LaaS.

In addition to veto protection by DAO and guardian, the rate limit will be enforced in code to prevent excessive malicious minting.

  • In favor as-is (100M FEI/month max)
  • In favor with more conservative params (lower rate limit)
  • In favor with more aggressive params (higher rate limit)
  • Not in favor

0 voters

4 Likes

Giving more power to snapshot voting is beneficial to small holders and further democratizes FEI. Overall a very good proposal!

2 Likes

OA’s mandate of injecting liquidity towards lending protocols is emerging to become the leading source of organic revenue for the PCV. A systemic way to runway its growth is definitely required, and in the near future lending demand for FEI can very well exceed our expectations.

On the other hand, perhaps we should consider in the same FIP; a mechanism for the OA to return/destroy excess FEI? We could also introduce that mechanism in a future FIP, since I envision a massive ramp of up FEI borrowing in the immediate future; on the order of 150M+.

Therefore it is unlikely we would need to recycle liquidity any time soon.

2 Likes

This feature would require some additional code development, would be minor, but I think it belongs in another proposal.

Question - while not important at this stage, would the minting capability be bounded by the Collateralization Ratio? While unlikely, we shouldn’t be able to mint more FEI if the CR drops below a certain percentage anyway.

We can add this as a requirement. I do like it, although it increases the complexity of the proposal somewhat.

I think if the protocol becomes undercollateralized, we can simply reduce the rate limit or remove the minter.

I think we should pause the minter if Collateral ratio should fall under 150% for any reason.

Happy with this proposal in principle, but wonder whether the team have a plan for what the first 100m fei will be spent on?

Would be more confident if there’s a plan to spend it before it’s approved.

It will be used for FIP-13 A Framework for FEI lending deployments and potentially Fei Protocol and Ondo Finance to provide Liquidity-as-a-Service (LaaS) - #14 by ondo.nallman if the latter is passed

Additionally it can be used for “one-offs” at the discretion of the Tribe holders via snapshot

As part of this proposal I would request to upgrade Rari to a ‘mature market’ and deploy FEI to 50M for borrowing in the Fei Rari pool.

2 Likes