proposal: FIP-37
status: Last Call
Summary
Begin the Fei v2 rollout with TRIBE buybacks as a percentage of protocol equity.
Motivation
Fei v2 was recently announced, and includes many features such as TRIBE buybacks/backstop, 1:1 redeemability, and algorithmic PCV management.
These features should each be staged and gradually increased in order to minimize any technical risk.
The first feature, buybacks, has completed audit and is ready for release. It will undergo a 2 week bug bounty before potential deployment. This proposal includes an initial trial week before ramping up to full buyback size.
Design
Buybacks use Balancer v2 LBPs to efficiently and continuously auction newly minted FEI for TRIBE.
Fei v2 has a contract called the PCVEquityMinter which mints FEI proportionally to the protocol equity and a given duration. For example an APR of 10%, frequency of every 1 month and equity of $120m would do $1m FEI of buybacks per month.
At the end of the month, the previous FEI->TRIBE auction will close and a new one will kick off.
The proposed initial parameter is 1 week frequency for buybacks with an initial trial week of 100k FEI.
The APR would be voted on by TRIBE holders, and be either 5%, 10%, or 20%. This number will be revisited at least yearly via snapshot.
At a current protocol equity of over $700m, this would amount to $35m, $70m, and $140m worth of buybacks in the first year, respectively.
The tradeoff of a larger buyback means less protocol equity to absorb market volatility (and prevent backstop). However, larger buybacks also increase the effective APR of liquidity mining and protocol treasury size.
Note that buybacks will initially go exclusively back to the treasury for initial rollout, but as more v2 features roll out portions can be burned, added to tribalChief rewards, or sent elsewhere.
- in favor @ 20% APR
- in favor @ 10% APR
- in favor @ 5% APR
- not in favor of buybacks
0 voters