Status: Last Call
Acquire 100M LUSD through a Balancer auction, which represents 9% of Fei PCV and 15% of LUSD total supply.
With Liquity USD pegged stablecoin (LUSD), Fei can earn yield (currently around 16% APR + liquidations gains) and better protect the $FEI peg.
Lending Stablecoins have scaling challenges as they depend on demand for leverage. However, in a crash scenario, liquidations help them to hold the peg when the market is deleveraging. Lending Stablecoins are a good fit for Reserve Stablecoins like FEI, helping the latter to protect the peg in extreme scenarios. For more info about that, take a look at the article: A Guide to Decentralized Stablecoins.
Liquity is a decentralized borrowing protocol that allows you to draw interest-free loans against ETH used as collateral. Loans are paid out in LUSD and need to maintain a minimum collateral ratio of 110%. In addition to the collateral, the loans are secured by a Stability Pool containing LUSD and by fellow borrowers collectively acting as guarantors of last resort.
Liquity launched in April 2021, the current market cap is $671M and possesses a total collateral ratio of 275%. More stats about Liquity can be seen here: Dune Analytics
Liquity is governance-free and has multiple decentralized front-end interfaces giving it more resilience and censorship resistance. It is very aligned with Fei in relation to decentralization.
In a next proposal, the LUSD could be allocated to Liquity native stability pool. By depositing LUSD to the Stability Pool, Fei can earn LQTY rewards and liquidation gains (in ETH). The APR is currently at 16%. This is an estimate of the LQTY return on the LUSD deposited to the Stability Pool over the next year, not including the ETH gains from liquidations.
If we stake the LQTY, Fei can earn the fee revenue paid for borrowing or redeeming LUSD.
Open a LUSD bonding curve with 100 million FEI.
Bonding curve parameters:
- Scale 100M FEI
- Mint cap 150M FEI
- Discount pre-scale 0.3%
- Premium post-scale 2%
EDIT: Acquire 100M LUSD through a Balancer auction
P.S.: Thanks @Fishy for the comments.