FIP-51: Fei <> Rari: Token Merge

We can sell part of ETH and put stablecoins in it, such as: USDT and USDC.

I believe we should accept that centralized stablecoins are currently more reliable than the likes of DAI, RAI, LUSD and FEI.

The merger is kind of 1:1 with current market cap. So each TRIBE is now backed by $1.6 of capital, it will be $0.8 after the merger (assuming the rari debt is not huge). It’s not clear what are the revenues and profits of both protocols but I guess it’s not much if any (post rewards). It is unclear how much time it will take to be accretive to the net asset value of a TRIBE token.

The key selling point of TRIBE is this pile of capital (and the ability to issue FEI). And in finance, capital is king. Asset managers and the money market need this capital to work. We can seed pools of other protocols so we provide value to them.

The protocol did boostrap the liquidity on Aave, Uniswap and others. This is probably the path to take: capital allocation.

Tribe should focus on its mission of increasing FEI usage to increase the leverage of its capital stack. It can help partners by providing seed capital for the pools. No need for more. Tribe should work to put FEI everywhere, not to build competitors that might or might not be the winners.


1:1 is a non starter.


very glad to see the close cooperation between the two DAOs! Thanks FEI community!

It seems that many $Tribe and $Fei supporters underestimate Rari, but I am just the opposite.

First of all, the market does not need a lot of algorithmic stablecoin protocol-DAI is enough, and even centralized USDC can meet many needs. Once the bear market comes, I don’t think FEI’s PCV can work well, but USDC and DAI will always be stabilized.

Moreover, For exchanges. The first important thing about stablecoins is to be easy to use. It is totally meaningless to forcibly create demand when there is no demand in the market. No exchanges will list ETH/FEI, because USDC\USDT\DAI is enough.

Rari is a very promising protocol, and the merger with FEI will only sacrifice part of its bright future of Rari. I am not saying that RARI will die if it merges with FEI, I am saying that many opportunities will be missed. Maybe in the future, Rari could use USDC or DAI more, but FEI, which will undoubtedly turn away many people.

I support FEI and Rari to maintain a good relationship, but I think the two DAOs should be operated separately.

I agree with some of your views, but it needs to be corrected. The usage scenario is one thing, and stability is another. Fei itself is a collateralized stablecoin that is far more stable than dai (super high mortgage rate), originating from the self-sacrifice of original investors. So if the team does not do some bad things (such as this merger), even if it is a bear market, it still will be safe


Your comments are very pertinent and support your ideas. We should turn Fei into infrastructure, and then slowly accumulate capital by relying on handling fees and rewards. Through the accumulation of time, PVC will explode at the index level when the market is mature, which requires patience and the perseverance of the team。Instead of investing huge money and taking huge risks to build a saturated track when something is not done well.

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Shreyas from Llama here. Written along with fellow llamas @green, @mason, @Matthew_Graham, and @yuan-han-li.

After spending more time digesting the details of the proposal and the comments, we wanted to share more details on the pricing structure for community feedback. We believe that a Fei <> Rari merger is mutually beneficial.


For Rari to offer a comprehensive solution for DAO customers, the Fuse product needs to provide manipulation-resistant price oracles and a native mechanism for sourcing stablecoin liquidity. Fei is the perfect partner to realize this vision because of the Fei x Ondo liquidity-as-a-service product and their ability to mint stablecoins. In addition, Fei is willing to facilitate repayment to Rari users who were affected in the hack earlier this year

Because of these dynamics, the Rari community’s ownership of the merged entity has the potential to be worth much more than an independent Rari. It will be difficult for both communities to arrive at mutually agreeable terms. In order to make this merger mutually beneficial, we should focus on providing multiple options for RGT holders.

Pricing Options for RGT Holders

The first option would allow for instant liquidity at a 14 day trailing VWAP from the time the merger proposal was made. RGT price would be discounted appropriately to account for the earlier-stage nature of Rari, the hack repayment, and the recent price momentum. RGT holders who select this option will be paid in FEI, thus excluding themselves from the upside of the merger.

The second option allows RGT holders to linearly vest TRIBE Success Tokens (each success token has 0.5:1 coverage, with a strike 50% above the 14-day VWAP pre-proposal price) over a 1 year period. The success tokens expire in three years. This aligns long-term incentives while still providing an exit option for those who want it.

Overall, there should be a cap for TRIBE’s dilution (possibly 20-30%).

Other Considerations

Expectations from both communities

  • Participation in governance: Fei can delegate Tribe voting power to former RGT holders. This ensures RGT holders retain governance power and can influence the future of the Fei-Rari protocol.
  • Product integrations: manipulation-resistant price oracles and a native way to source stablecoin liquidity for Fuse pools. By combining the yield aggregator, Fuse and Fei, Fei can become a dominant stablecoin across various chains.

Hack repayment

  • Amount: $11m to be repaid, likely in FEI
  • Timeline: make the hack repayment upfront
  • Financing: potentially pay $11m via debt to ensure that the Fei-Rari entity is paying for his rather than just Fei

We could propose an OTC of 11M FEI for RGT from the Rari DAO treasury, before the merge? It seems that their treasury holds >80M$, but the problem is that it’s not very liquid. An OTC solves that.

That will get the “hack compensation” out of the picture from the merge, and then there are 2 outcomes possible :

  • We merge, so the Fei DAO will convert the RGT to TRIBE. The net effect is the same as if we made a buyback of 11M FEI for TRIBE.
  • We don’t merge, but the Fei DAO will have RGT & be able to participate in Rari’s governance. It’s still a good idea because the protocol deploys tens of millions of PCV to Fuse already.

Why are third parties describing how the merger will take place? It’s not up to you to decide! This deal will not be! Can’t you see that most of our community doesn’t want this?

With regards to the payment of $11 million for the hack.
I believe that our community could do this in order to strengthen our long-term relationships and partnerships.

But under no circumstances should we buy this protocol for $ 400 million. It is very expensive and very stupid!

I didn’t invest in the protocol, but in the algorithmic stablecoin. If I wanted the protocol, then I would have bought it earlier.


What annoys me the most is that the team writes as if you had already decided everything.

This is not your money! Third parties should not be involved in this decision! Tribe investors don’t want to buy Rari!


The whole article does not give a reasonable valuation of Rai. How does it calculate and what is the specific scale. You put forward the vision of representing two communities. Sorry, you can’t represent anyone, at least not me and some people who oppose this proposal. There are many schemes for anti manipulation oracle. It is not the only option to buy Rai at a high premium and let him get the governance right of Fei. It’s more like stripping the assets of the parent company and getting control of it.
The mutual benefit you mentioned is entirely your one-sided statement. At least so far, rai community hopes to repay their debts through merger, and Fei from tribe community will undertake the RGT selling pressure they could not support. Then, tribe users have been receiving sustained losses since yesterday. What is mutual benefit? Don’t lie


Thanks Jai and thanks to others for all their input. While I am still thinking through a lot of the merger mechanics and what can be called ‘short-term’ issues, I do have something to add for the ‘long-term’ trajectory of this merger. As both a TRIBE and RGT holder (for quite a while now), I think what really makes this merger powerful is the force that it will create when positioned as a DeFi 2.0 entity. It bewilders me that no one in this governance forum (excluding Jai and one user - Andy) has even mentioned DeFi 2.0. Are we still under the impression that FEI is just a stablecoin? Similar to how Rari is construed by many as just a money market. This isn’t the case, and if you see the merger with this as the foundation of your perspective, then it can be quite complex to understand the synergies and the rationale behind long-term value creation pertaining to Fei<>Rari.

On Fei Protocol’s front, a key piece of strategic intel is the partnership with Ondo Finance, where Fei Protocol attempts to create a short term LaaS (liquidity-as-a-service) offering. This offering, contrary to what many just assume in the space, is COMPLEMENTARY to other LaaS offerings like Olympus DAO and Tokemak. Just like banks have many forms of liquidity - commercial paper, repos, discount loans (from Fed), interbank loans, subordinate debt, etc - DeFi protocols will also come to have many forms of liquidity. There will be long-term protocol owned liquidity (via Olympus Pro), medium-term Tokemak-directed liquidity, AND short-term liquidity. Fei<>Ondo is short-term liquidity, similar to 30-day commercial paper in a way. This is important for many situations: short term liquidity bridging while switching between liquidity solutions, temporary product boosts and launches, and much more. Fei Protocol’s stablecoin has actually been performing quite well (ever since it corrected itself post-launch mishap), but this is not all it is. DeFi 2.0 will become its core strategy, and the FEI stable will be integral to achieving certain services in that realm, starting with the Ondo partnership.

On Rari’s side, you have the elegance and malleability of Fuse. This infrastructure allows for the creation of all sorts of markets on an isolated lending basis. When I think of Fuse, I think of liquidity and lending tooling. This is quite invaluable. And while Aave and Compound serve their respective end-markets, Fuse should find its own positioning with regards to long-tail lending, leveraging, special situations, and DAO services. Infrastructure is very important in DeFi. I, as well as several others, am of the opinion that the infrastructure is what will become the most valuable part of DeFi. Rari’s infrastructure is pioneering and cutting-edge in many ways.

Putting these two together, in the context of DeFi 2.0, creates something that could be quite powerful. On one hand, you have FEI, a capital substance. FEI is liquidity. On the other, you have Fuse (+ other Rari tech). This is infrastructure - the pipes and tooling. Put together the infrastructure and the liquidity… and you have possibilities to build some really valuable DeFi 2.0 services. In my opinion, Fei<>Rari would become very valuable as a DAO servicing entity. Yes, its retail offerings will still be around, but the real magic in all of this could lie in how the infrastructure+liquidity elements come together to create a very competitive DeFi 2.0 liquidity / financing offering.

This is my perspective on the long-term. I do totally concede that there is a lot to sort out and organize in the coming weeks to get this deal into a transparent, fair, and well-executable format; however, I thought that I would offer this vision to the discussion process.


Speaking as a Genesis participant, TRIBE and RGT holder, I could not be any more excited about this proposal. The sum that can be achieved by these two teams working towards a unified goal far exceeds what they can achieve on their own.
The FEI stablecoin is a great product, although, just like any other stablecoin, it requires an ecosystem of use cases around it to continue its growth. Rari and, specifically the Fuse pools provide Fei with this such ecosystem in a synergistic manner. There is great product-market fit (or arguable, market-protocol fit) for the unified products that these two DAOs can offer together.

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Fei Protocol can build DeFi 2.0 without buying Rari Capital.
You can build a protocol for a lot less money, just allocate money from the PCV and hire the right people. Why does the team manage community money as they see fit? On this forum, a lot of people spoke out against this idea. I feel cheated a second time.

How is the team trying to recoup the Genesis Fei Protocol investors who chose Tribe 100% and got multiplied by 0.15???


Has there been any discussion around why Rari is the best fit for a merger compared to other protocols like Tokemak? What analysis has the team done around the synergies of one option compared to the other?

One of my largest concerns, irrespective of if I like Rari or not, is that neither protocol has put forward ANY financials to help token holders properly do their own valuations and risk analysis. Please name one $400M proposed merger that did not report financial statements to shareholders.


Merging is good. But not on the terms that you describe.


just wanted to share the post on RARI Forum that “masterspoon” posted. I also agree with his suggestion.

Hello, I’ve been thinking a lot about this merger, and have some thoughts. I like what these products are trying to do, and I see what you guys are doing with FujiDao, the yield aggregator, Fuse and Fei. I’m very excited to see what you guys build together! It’s truly an exciting time to be in DeFi. These are my thoughts related to the logic of if a merger makes sense at this stage.

  1. Rari Capital has put out two innovative products that have PMF, and more to come. Rari Capital TVL is growing at a crazy rate.
  2. Tribe has put out Fei, but has struggled to gain much traction in terms of issuance and integrations within the broader DeFI ecosystem, relative to the greater stablecoin market.
  3. I see what you two have been working on with FujiDao. I’ve used it, and the implications are very cool.(I presume this project will get acquired by the two teams, under one roof in the future, if this merger passes)

I have some questions for @jai @JackLipstone @t11s @davidlucid @JetJadeja and the rest of the Rari Core Team, are you sure you’re getting the best offer you can for the products you’ve built/are currently building? Do you want to consolidate parts of your autonomy to build what/when/why you want for betterment of Tribe’s vision?

For both @jai and @Joey, the synergies between these two teams and FujiDao could be massive, and the vision is clear to those paying attention. The yield aggregator working in tandem with the debt aggregator through Fuse with a stablecoin has some pretty radical, transformative implications; however, merging is a one way street, and DeFi has a long way to go before it’s ready for mass adoption. I’d like to propose a partnership with exclusive rights for Fei to be the “guarded launch partner” of all Rari Capital products in return for paying off Rari Capital’s debts. This way Rari Capital retains it’s identity and autonomy, Fei gets a leg up on the competitive stablecoin market through exclusive access to Rari Capital’s suite of products, and both teams are incentivized to make sure each other is innovating and bringing the best possible products to market.

A merger is a one way street, and puts a lot of risk on both the Tribe and Rari Capital token holders. As a Tribe holder, I’m concerned about Tribe spending a huge portion of its treasury to buy out Rari Capital. As an RGT holder, I’m worried about the ability to execute the vision of Rari Capital, a algorithmically fair lending and borrowing market across DeFi, due to unforeseen differences in vision between the two teams and communities. If a merger fails, both protocols could collapse. If the merger goes through, and the voice and autonomy of the two teams aren’t properly delegated, the market could suffer from lack of innovation due to the need to meet the bottom line of investors over providing the best products for users. If a partnership fails, both teams can end things amicably and move on to filling another need in the market. If a partnership succeeds, the teams are more likely to have a successful merger. A merger does not seem appropriate to me at this time, but the synergies possible between these projects should be explored. If the partnership succeeds over a long enough period of time, I think it would be appropriate to talk about a merger.

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Thanks for all the ideas. Let me share mines as lnvestor in Tribe since genesis.

  1. Fei is meant to be defi stable currency. Commercial Lending is not part of traditional money issuers(cb’s). lending to other DAO’s (commercial banks in traditional sense) has logic. Merger has not.
  2. If CBDC will come and and invade USDT or USDC, a defi stable currency has two options
    a) stay as defi stable and harbour safely migrating values from USDT/USDC.
    b) opt to peg its stable coin to CBDC which will be the only option ( become non defi) and assume the role of a Commerial Bank operating (like Rari) in crypto areas.

We dont know if and when CBDC will come.
A safe bet for FEI would be becoming a stake holder in a commercial banking operation (like buying Rari DAO helping them paying back 11mm debt) keeping the original identity as defi stable coin while positining as safe harbour for imminent migration from USDT/USDC building PVC.

When CBDC comes (if it comes at all) TRIBE increases its shareholding in RARI paying a premium preset now, and becomes establisment in Commercial Banking that has propriety (FEI) money market instrument to raise money for lending via lending Machlne (RARI)
IF CBDC will fail FEI had better preserve its major stable coin role wlthout limiting ltself to being a commercial lending player.
In short small steps forward will serve better both FEI&TRIBE and RARi prosper under different scenarios.

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@jaibhavnani @joey

Perhaps can you both give us more concrete details on how you will utilize this new partnership in the immediate future. It would be useful to also clarify the following:

  1. The products and development timeline within the next 6 months in the framework of the new merger;
  2. How you will be able to minimize dilution of TRIBE and whether you will accept that the founders have considerable skin in the game - to dilute a proportion of the core team’s share of TRIBE instead of potentially minting new TRIBE and using only Treasury TRIBE? As an aside, can you also clarify why this merger coincides with a new proposal to remove IDO liquidity of FEI-TRIBE tokens from the team’s share into cold storage?
  3. Can you please also shed some light on how you are able to manage this huge undertaking with the imminent release of Fei V2? And that both teams have the capacity to handle both events.
  4. As some others have mentioned, can both Rari and Fei release a financial report of your current situation?
  5. If the PCV is merged with Rari there will be some change. How does this impact the current TRIBE buyback policy?
  6. Are there any cooldowns with new FIPs (and similar proposals on Rari’s side) both before and after the merger to ‘let the dust settle’?