FIP-35: mUSD/FEI Feeder Pool @ mStable

Hello, I am dimsome, the ProtocolDAO CatHerder @ mStable.

We are currently having a discussion in our Forum about a potential mUSD/FEI Feeder Pool and wanted to loop the Tribe into this discussion and also about the broader picture.

What is a Feeder Pool?

A Feeder Pool is a stable swap 50/50 AMM. But not just that! The assets that are deposited into the pool can additionally earn a yield on lending platforms on top of earning swap fees. An FEI Feeder Pool would allow anyone after obtaining FEI, to swap it to the most common other stablecoins, earn a yield in the feeder pool, or swap directly into our mUSD SAVE product that earns consistently an above-market rate APY.

Open Questions

With the proposal being drafted, there are a few things I want to bring up in order to make this a successful launch:

  • With FEI V2 just announced, does it make more sense to postpone the launch of the Feeder Pool to directly start with FEI v2? We would be happy to be the first ones to support FEI V2 and offer FEI V2 Swaps
  • Liquidity Bootstrapping can be quite difficult. We are usually incentivising with our native MTA token deposits into our pools. To make it much more attractive, is there interest and the possibility to offer TRIBE rewards on top? Dual-Incentives is something we are always keen on exploring.

Would love to hear the community and the core contributors opinion on the two points outlined. Let’s have a fruitful discussion.

Links

9 Likes

This is a great idea. I’m very supportive of enabling an mUSD/FEI feeder pool.

I think the best reason for this to happen for the Tribe community is to let FEI holders access mStable Save. mStable Save outperforms the market (aave, compound, even yearn) and in our view one of the strongest savings products in defi in terms of risk / return.

Here’s some data:

Where do the yields come from? https://twitter.com/naddison/status/1418467405769043973?s=20

2 Likes

Dual incentives liquidity mining is great for partnerships. We are currently looking for ways to incentivize liquidity of FEI against other stablecoins, so the proposal is timely as well.

It seems you have an interesting model here. mUSD holders have a choice between depositing in a Feeder Pool and depositing in Save. Feeder Pool gives more MTA while Save gives higher base APY, so Save depositors are effectively selling their MTA rewards to Feeder Pool depositors. Allowing mUSD holders to have this choice is a very cool feature.

FEI V2 won’t break integrations or anything, but there might be some market volatility coming from the upgrade. This could affect how we want to calculate the respective incentive amounts, for example.

2 Likes

I think this would be a great integration - allowing FEI to be used as collateral on the Save product would further expand the use case of FEI and its ecosystem.

Personally I would wait until V2 launches, but according to the team that should happen in November. I think that a system upgrade AND a new integration would at least sound better from a marketing point of view. You also never know whether there are any potential bugs that may get introduced. Best to side on caution.

I would support this - in fact I would even venture to say to split the 1000AP TribalChief rewards stream going to Curve and divert some to this integration instead. How much to divert I’ll defer to others but intuitively this could be 100-250AP, depending on how much mStable wants to also incentivize from their end.

1 Like

Hi guys,

long-time follower of both mStable and Fei Protocol here, and I’d love to see this thing come to fruition. I’d hope that by establishing a feeder pool first with the protocol, there would be a world where one day one of the centralized basket assets like USDC or USDT could be swapped in favor of FEI, and thus creating a more robust basket down the line.

This current iteration would already be a massive step towards this though, and speaking from experience, mStable loves decentralization and protocols that think alike :sunglasses:

Just from a gut feeling, and even though it would mean the feeder pool couldn’t deposit a portion of the FEI in Aave or Rari right away, I would argue that FEIv2 would be a better fit, as it would set the pool up for the long-term, and might even help incentivize people to swap their old FEI for FEIv2.

I could see a world where mStable even allows for this swap to happen under the hood, and perhaps an incentive be given for swapping and depositing on the site instead of another, but @dimsome would know better of course.

Really excited for this, and hope this will come very soon!

That is interesting, so you are saying, that the ERC20 Token stays the same, only the underlying function changes? Does that mean that if we were to deploy a feeder Pool with FEI V1, we wouldn’t need to deploy another one once FEI V2 launches?

I agree, November is not that far in the future and with governance, we have to give time to pass the proposals, so the timing would be ideal. We’ve done guarded launches previously for some newer mechanisms. Maybe we could start with a TVL cap and increase it over time as we did with mBTC.

Currently, Feeder Pools receive roughly 13k-22k MTA weekly. This is dependent on TVL and on Volume.

1 Like

I support this proposal. The mStable community shares our decentralization ethos and would be a strong team to partner with.

I do not think we need to wait for V2 to get this started.

2 Likes

Tribe,

It seems like there is wide support (including Fei Labs) on this proposal and to further incentivize the pool from Fei’s side with TRIBE rewards. Let’s do a quick temperature check:

How much of TRIBE rewards would you support to incentivize this pool?
  • Nothing
  • 100 AP
  • 250 AP
  • 500 AP
  • More than 500 AP

0 voters

Would the community also support opening up additional reward stream of TribalChief (lowers all existing rewards) or to divert from an existing pool?

Would you support an additional reward stream or divert existing rewards?
  • Open a new stream (lowers all existing rewards)
  • Divert AP from FEI-TRIBE (lower rewards in this pool only)
  • Divert AP from FEI-3CRV (lower rewards in this pool only)
  • Divert AP from TRIBE in Rari (lower rewards in this pool only)
  • Divert AP from other pools
  • Do not incentivize this pool

0 voters

I think we can aggressively divert the rewards going to Curve and move 500 AP. I would even consider diverting the whole 1000 AP, but that may not be fair to gas-sensitive stakers already in Curve. We can adjust again when we add other stable pools.

That is interesting, so you are saying, that the ERC20 Token stays the same, only the underlying function changes? Does that mean that if we were to deploy a feeder Pool with FEI V1, we wouldn’t need to deploy another one once FEI V2 launches?

This is correct.

500AP seems way too high here. 100AP on FEI-DAI Gelato created $15M TVL. mUSD’s whole market cap is $42M. 50AP or 100AP seems more reasonable to me

5 Likes

I’m on board with moving rewards slowly away from both Curve and UniV2.

Going towards Balancer, UniV3, and Fuse will be good, along with some of the other forming partnerships such as BarnBridge and Idle.

For now I agree with storm that 50-100AP is great for this and we’re excited to partner with mStable!

4 Likes

All - should we move forward with this at 100AP diverted from FEI-3CRV?

@dimsome @james_mstable @Brianna @joey @storm

7 Likes

sounds good to me :+1:

1 Like

Sounds good to me! The proposal on our side will move Monday to snapshot vote: PDP 34: Add mUSD/FEI Feeder Pool - Governance - mStable | Governance

2 Likes

:+1: :+1: 100AP from FEI-3CRV sounds like a good plan.

2 Likes

I think we can take the rewards from UniV2 possibly as well. Why don’t we snapshot the 3 options and see what wins?

Moving this proposal to Last Call as FIP-35

Just to note that our vote is up: Snapshot

And after less than an hour, we got more than 5M vMTA votes. Usually, we get this amount after 5 full days of the vote. Seems a lot of excitement from our side. Screen Shot 2021-10-25 at 21.39.41

1 Like

@dimsome this passed snapshot on our side! Can you provide some kind of ETH address for us to incentivize if the pool gets deployed?

2 Likes