FIP-56: Fei V2 Deployment Proposal

Fei v2 is coming up fast! Here is the proposal for which features go live on the 15th and which come in early 2022.


On December 15, pending governance approval, the following features will go live for DAO vote:

  • TribeMinter with rate limit
  • TRIBE Backstop
  • DAI redeemability contract

The remaining v2 features will be spread out over early 2022:

  • Early Jan - ETH redeemability contract + permanent burner revocation
  • February - Permissionless FEI Fuse bootstrapping product
  • March/April - Risk Curves


The TribeMinter is a new contract that acts as an admin for TRIBE minting operations either by the DAO or the backstop. It includes a rate limit on annual inflation and a new access control module.

The annual inflation limit is calculated dynamically based on the tribeCirculatingSupply(). This is calculated by taking the total TRIBE supply at a given block (currently 1bn) and subtracting the TRIBE in the treasury, liquidity mining dripper, and the TribeMinter itself. The TRIBE held by the TribeMinter is effectively burned. The only way for this TRIBE to exit the contract is a new minting event. The contract first transfers out TRIBE from the TribeMinter before minting new TRIBE and increasing the supply cap.

The initial inflation limit will be 100% per year to allow plenty of room to protect the peg in the early stages. Other Fei v2 mechanisms are designed to minimize the likelihood of needing to use the backstop at all. The inflation cap is dynamically adjusted as TRIBE is minted and burned using a poke() method.

Additionally, the contract exposes the mint() operation to any contract with the Governor role (currently only the DAO) or the mint admin role (currently only the backstop). All minting events regardless of role share the same annual inflation limit.

The DAO can lower but not increase this number. It is possible to increase or remove the cap by transitioning the ownership of the minter. The DAO can also decide to permanently freeze the maximum cap by revoking its ability to change the TribeMinter contract. This is a serious decision that should only be considered after a long window of production data in many different market conditions.

Tribe backstop (TribeReserveStabilizer)

The Tribe backstop is a contract that allows holders to exchange FEI for newly minted TRIBE when the collateralization ratio is under the threshold. The exchange rate will be 1:1 at the oracle reported price for TRIBE in USD. The initial collateralization ratio threshold will be 100%. This can be raised or lowered by governance in the future. Using a number greater than 100% introduces edge cases where a backstop could be triggered simply by increased FEI demand which is undesirable.

The backstop includes an “Oracle Security Module” similar to MakerDAO where the collateralization ratio needs to be continuously below the threshold for a certain period before the backstop is open for usage. The proposed window is 24 hours. This is in place to further minimize backstop usage in the event of near threshold collateralization and sharp market volatility.

DAI Redeemability

Fei v2 redeemability was inspired by the MakerDAO’s PSM. It will allow users to exchange FEI for PCV assets at 1:1. This consolidates the logic of the ReserveStabilizer and Bonding Curve into a single contract.

The first redeemability contract proposed is DAI. This will allow users or arbitrage bots to swap FEI for DAI at $1 according to the oracle price with a small fee.

The DAI redeemability contract will have a “Price Bound” mechanism which automatically shuts down redeemability if DAI trades outside a supported range. This saves the PCV in the event of DAI completely losing its peg. The proposed initial bounds are $.95 and $1.05.

Redeemability contracts refill their own reserves by pulling from other PCV contracts periodically. The DAI redeemability will have a dripper attached to the Compound DAI PCV Deposit with a frequency of 30 minutes and a size of 5m.

Additional parameter changes:

Increase ETH reserve stabilizer and bonding curve spread to 75bps

DAI spread at 50bps to be lowered when we lowered within 2 weeks to 25 bps

DAI buffer starts at 20m and lowers to 10m within 2 weeks.

Add DAI redeemability as a “Safe” address for the PCV Guardian to send funds to.

Tentative Voting Timeline

  • Snapshot Dec 13 at 1pm PT
  • DAO vote Dec 15 at 1pm PT
  • Execution Dec 18

Did I understand correctly that you mean that the Tribe Minter will mint new Tribes to align the peg?

Those. are you saying that the circulation of TRIBE tokens can exceed 1 billion tokens?

It can exceed 1bn but the risk curves are intended to minimize the likelihood of a backstop

The face value of DAI is $1, maybe it would make sense to cap the DAI price to $1 but allow the transaction to work. So far I understand that if DAI is mispriced to $1.03, the FEI protocol would be happy to buy DAI at $1.025. This seems risky if I understand correctly.

The lower bound could be $0, but I would agree that if the DAI price depeg on the downside, it’s probably better to stop the PSM. It’s a profit vs risk situation.

PS: As an addition, Fei Protocol (and the redeem) should integrate Uniswap V3 at least or be clear that the price you get is probably worse than secondary markets. It seems that all users of these interfaces have overpaid.