FIP-59: TribalChief Allocation Adjustments

Summary

This proposal:

  • reduces TribalChief allocation points for Uniswap v2 FEI/TRIBE LP tokens from 1000 AP to 0 AP.
  • reduces TribalChief allocation points for Curve 3CRV/FEI LP tokens from 1000 AP to 500 AP.
  • Increases TribalChief allocation points for Uniswap v3 Fei/USDC 0.05% fee tier Gelato tokens from 0 AP to 500 AP.

Motivation / Background

FEI/TRIBE LP tokens
25% of FEI/TRIBE liquidity (amounting to ~$87MM) is currently staked in the TribalChief contract earning 47% APR. The remaining 75% (amounting to ~$271MM) is owned by Fei Labs core team and investors, subject to a 1 year cliff and 3 year linear vesting, and custodied by the IDO contract.

$1.32 | Uniswap FEI/TRIBE LP (UNI-V2) Token Tracker | Etherscan The trading volume on the Uniswap v2 FEI/TRIBE pool is de minimis. At current TRIBE prices, TRIBE holders are paying $112,000 per day to increase the size of the Uniswap pool from $271MM to $358MM, which results in marginally lower price impact.

https://v2.info.uniswap.org/pair/0x9928e4046d7c6513326ccea028cd3e7a91c7590a
This proposal removes TribalChief incentives for this pool, which will increase the value of our other incentive programs proportionally.

Fei / Stablecoin Liquidity
This Curve metapool is doing very little volume in part because it is not being seen by aggregators like 1inch and Paraswap, and because of the existence of concentrated Uniswap liquidity:
-incentivized Fei/Dai .05% Gelato LP with $18MM TVL, and
-unincentivized FEI/USDC Uniswap liquidity with $33.75MM TVL

These two pools combined are averaging ~$70MM daily volume recently with a combined 100 AP, whereas the Curve pool is doing far less volume with 1000 AP. This combination of changes will create deep, concentrated liquidity on Uniswap, and create the most liquid onramp to
The 2 pools:

Gelato Uniswap v3 FEI/DAI .05% (100 AP, no change from current)
Gelato Uniswap v3 FEI/USDC .05% (raise from 0 AP to 500 AP)

will have combined 600 AP vs the previous 1000 AP for the Curve pool. This will be a more efficient use of incentives going forward.

6 Likes

Incentives for FEI/TRIBE not only increases liquidity, but it also works like a vesting contract for TRIBE holders. So I think the current AP should be maintained until LM runs out in April 2023.

As you mentioned, there are two factors that are boosting TRIBE/FEI liquidity - LM and IDO. Both are scheduled to end at some point, but we should be prepared to indefinitely incentivize TRIBE/FEI liquidity in one way or another. This is because we will always be incentivizing other types of FEI liquidity, and this actually crowds out TRIBE/FEI liquidity. So we need to counteract that to maintain good liquidity for TRIBE. Of course, as vesting TRIBE gets unlocked, LM for TRIBE won’t distort protocol ownership as much, so we are okay on that front.

But I agree that we can incentivize TRIBE/FEI in a much more efficient way by moving out of Uniswap V2. We could do Gelato or just use the Uniswap V3 LM contract.

2 Likes

+1 for increasing stablecoin liquidity on uni v3 via gelato. it has been a huge success so far

I think the curve Fei3Crv should be reduced from 1000AP → 500AP and the curve D3 pool (fei, frax, alusd) should also go 0 → 500AP. might want to coordinate this plan with other curve plans (FIP 53 FIP-53: Enter the Curve Wars)

on TRIBE-FEI, I agree that there should always be lots of TRIBE liquidity. I dont really agree that it needs to be incentivized FEI-TRIBE liquidity. there just needs to be liquidity one way or another

this particular point should probably wait until after FIP-46 is resolved, because that will have a significant effect on the TRIBE liquidity. if the IDO liquidity is completely removed, then the incentives should stay and possibly be increased. if the IDO liquidity completely stays unchanged then removing the LP incentives might make sense

(FIP 46 Remove team's Fei-Tribe LP from uniswap pool - #12 by storm)

3 Likes

The incentives for TRIBE/FEI are wasteful and their removal is overdue imo.

For stablecoin incentives:

  • in the interest of getting a “good enough” solution quickly, I support using Gelato. In an ideal world we could use the Uni-v3 staker contract, but my understanding is it’s not as easily compatible with TribalChief
  • In the interest of making Fei the most frictionless stablecoin to trade with, I would suggest using the newly added 1bps fee tier for the USDC Gelato pool.
  • Upper and lower price ticks for gelato should be chosen narrowly based on the typical trading range. The remaining curve pools can service liquidity needs for the <1% of the time the price leaves these narrow bands

I do think it will be easy to get caught up bikeshedding incentives. This proposal as is is already a massive improvement to the status quo and would support.

3 Likes

In favor of everything Will said with 3 caveats:

  • all incentives should be adjusted gradually over call it 1 month to prevent sudden shocks
  • add 500 AP to Curve d3 pool with FRAX and alUSD. While not the most useful pool ever, its getting pretty awesome volume and the other projects are down to co-incentivize
  • new incentives should be done in FeiRari where possible
1 Like

:point_up::point_up: yes I think this is definitely worth trying out. not sure if it will provide the highest returns but it will probably provide the most utility to the protocol

the current 0.05% DAI/FEI pool has the fattest and tightest FEI liquidity on chain right now. most FEI arb’ers go through this pool and it gets healthy apy even pre-TRIBE incentives. a 0.01% would allow more efficient arb’ing, a tighter peg, and more efficient protocol mechanisms

(the current gelato pools Sorbet Finance - Automation for Uniswap, Quickswap and PancakeSwap)

Some comments :

1/ FEI-TRIBE Uniswap v2 LP token incentives
I’m not married to FEI-TRIBE Uni-v2 LP tokens incentives (especially since we now have fTRIBE-8 incentives to deposit TRIBE in the FeiRari fuse pool). But, let’s wait for FIP-46 discussions to continue first as @storm says. We may remove the IDO liquidity, and we’ll still need some liquidity somewhere. It’s too early to move without a good plan. I’d like to suggest that the protocol deploys liquidity on Balancer for FEI/TRIBE and WETH/TRIBE that we co-incentivize with BAL and TRIBE, then we could kill the Uni-v2 incentives - but we’ll discuss this in a separate thread. There are multiple ways to solve the issue.

2/ FEI-3crv Curve metapool LP token incentives
Revisting how we distribute rewards on the Curve pools is a good idea, but I think we can do better than what is proposed here. I have been in talks with some community members and Convex lately (as part of FIP-53, but also to design the next steps). I think over time we should eventually drive 3crv/FEI LP tokens rewards in Tribal Chief towards zero, and replace these with an adapter contract that gets TRIBE rewards from the TribalChief, and use them to bribe on Votium (Convex).

The issue with the strategy proposed by @joey and @storm is that if we incentivize users to stake their Curve LP tokens in our TribalChief directly to get TRIBE rewards, they won’t be able to also stake their LP tokens in Curve/Convex, so the rewards are exclusive. Moreover, bribing has over 3x ROI (1$ spent on bribe drives 3-4$ of rewards on the pool), so it would be better to use the TribalChief rewards to bribe and have users stake on Curve/Convex. We can have multiple “briber contracts” for multiple Curve pools on the TribalChief (e.g. one for the metapool and one for the d3pool, maybe others).

On a related note, Convex will help us to raise the A factor of the metapool from 10 to 500. Currently the TVL we attract there is not very useful, because trades get a large slippage compared to Uniswap v3. This will change with a high A factor.

3/ Adding more Uniswap v3 incentives
Very supportive of incentivizing FEI-USDC liquidity on Uniswap v3. I think we should incentivize the 0.01% fee tier, because liquidity won’t go there without incentives, and still that’s the best option for the protocol. Allows super cheap arb. I don’t think 500 AP is wise, 100 AP were enough to attract 18M$ in the FEI-DAI pool, and it’s more than enough to get most trades routed through Uni v3 already. I’d suggest to add a 150 AP FEI-USDC 0.01% fee reward stream, and a 100 AP FEI-USDT 0.01% fee reward stream. The protocol will probably never deploy USDC/USDT liquidity because we don’t want exposure to custodial assets in the PCV, so using incentives to drive user funds there is optimal.

4 Likes

Support:
-removal of FEI/TRIBE LP incentives (1000 AP → 0 AP)
-large reduction in 3CRV/FEI incentives (1000 AP → 0 to 300 AP)-- this pool has been wasteful for 3 months already for reasons outlined, Uniswap/Gelato far more efficient for protocol needs. Joining the Curve wars is a separate proposal/discussion
-addition of FEI/USDC Uni v3 Gelato incentives (1bp or 5bp fine) (200-500 AP)

Neutral:
-addition of FEI/USDT Uni v3 Gelato incentives (1bp or 5bp fine) (100-150 AP)-- unsure if this is needed with very deep, concentrated FEI/USDC.

Against:
-gradual reduction of LP incentives (this reduction is long overdue)
-removal of the IDO liquidity
-500 AP for Curve d3 pool (there is extremely small demand to trade between these coins). 50-100 AP maybe

2 Likes

For this reason I think we should centralize rewards on a Fuse pool, so we can add a plugin later to get the rewards.

Gradual even over 2 weeks is still better than immediate imo

I prefer using PCV to determine liquidity depth. We can make a TRIBE pair with FEI on Balancer or use Tokemak instead of enforcing IDO liquidity to remain locked. Overall neutral here.

I assume FEI will be natively useful in Frax and Alchemix pretty soon which would increase demand to these pools. I’d want to push for more here maybe not a full 500 but definitely a good 100-250. Especially because this can be used to farm CVX. Alchemix and Frax intend to go hard on these pools too, so think more about everything else besides the raw volume.

Okay so in summary:

  1. Remove FEI/TRIBE Uniswap LP incentives (1000 → 0 AP) – core preference for gradual rather than all at once
  2. Incentivize FEI/USDC Uniswap v3 LP (0 → 200 to 500 AP) – seems people like the 1bp pool
  3. Reduce 3CRV/FEI incentives (1000 AP → 300 AP) – revisit when it’s seen by aggregators
  4. Incentivize Curve d3 pool (0 → 100 to 250 AP) – related to Convex
  5. Generally get involved with / farm Convex

EDIT: changed 3Crv option to 500 and 250 instead of only 300

Moving this proposal to last call as FIP-59.

The options above will be voted on using “Approval style” voting:

  1. Remove FEI/TRIBE Uniswap LP incentives (1000 → 0 AP)
    a. Gradually over 2 weeks
    b. All at once
    c. Do not remove

  2. Incentivize FEI/USDC Uniswap v3 LP 1bps (pending router fix)
    a. 250 AP
    b. 500 AP
    c. Do not incentivize

  3. Reduce 3CRV/FEI incentives
    a. 250 AP
    b. 500 AP
    c. Do not reduce

  4. Incentivize Curve d3 pool
    a. 100 AP
    b. 250 AP
    c. Do not incentivize

5 is already covered by another FIP and will not be voted on here.

This will be posted Monday, Dec 27 at 12pm PT

2 Likes

Included [Proposal] Bribe on Votium for the d3pool as well. Snapshot will go live at noon: Snapshot

I plan to recuse on the FEI-TRIBE LP incentives as I believe this is a community decision. For the others, I will vote:

  • 250 AP on FEI-USDC (more than enough and can scale up later)
  • 250, 500 AP on FEI-3Crv (prefer 500 but will approve both)
  • d3 250 AP (this will be good for us to earn more CRV/CVX)
  • Votium 250 AP (same logic as d3)

It seems that the FEI-3CRV incentives will override #5 in FIP-66 (in this proposal, the TribalChief rewards AP rate will drop to zero). We will follow the parameters on FIP-59 for this.