FIP-XX: Seed $1M FEI to Impermax for Leveraged FEI-TRIBE Farming

Proposals
1

FIP-XX: Seed $1M FEI to Impermax for Leveraged FEI-TRIBE Farming

Status: Stage-0 Draft

Authors: @countvidal @JokerTheBond

Summary:

Impermax is working on creating a Uniswap V2 FEI-TRIBE leveraged farming pool. This would allow FEI-TRIBE stakers to 5x their APYs through leveraged farming. Impermax would auto-stake the new TribalChief staking contract and auto-compound. This proposal seeks to seed $1M in FEI to Impermax so that users can borrow FEI to increase their staking rewards.

Motivation:

With the new TribalChief staking rewards system, FEI-TRIBE LP stakers have had their APYs reduced. This proposal tries to give those stakers the option to take on more risk to increase their APYs to the same level it was before or higher. Additionally, it allows holders of TRIBE to lend out their TRIBE in a way that is beneficial for the TRIBE price. Stakers looking to leverage will be increasing demand for TRIBE and thus have positive pressure on the TRIBE price. Users will purchase TRIBE to earn better APYs than offered in Fei-Rari Fuse pool by lending the TRIBE out in Impermax.

Specification:

Once the Uniswap V2 FEI-TRIBE pair is listed on Impermax, users will be able to lend FEI and/or TRIBE to FEI-TRIBE LP holders. Lending on Impermax is a set and forget action. Lenders earn the interest paid by the borrowers which is autcompounded to the lenders’ balance.

FEI-TRIBE LP holders can deposit their LP tokens on Impermax to be able to borrow FEI and/or TRIBE. On its end, Impermax deposits all the LP tokens that it holds as collateral on the TribalChief staking pool, and automatically compounds the reward to the LP tokens.

Once a liquidity provider has deposited LP tokens on Impermax, he will be able to use the “leverage” option, which will:

  • borrow FEI and TRIBE;
  • supply FEI and TRIBE as liquidity to Uniswap to obtain more FEI-TRIBE LP;
  • deposit FEI-TRIBE LP as collateral to Impermax.

By leveraging, LP holders will be able to multiply the yield that they earn from trading fees and staking rewards. Initially, we expect users to be able to achieve leverages up to 5x in this way.

If this proposal is passed, Impermax will give an IMX reward to incevize FEI and TRIBE borrowing in order to kickstart the pool.

About Impermax:

Impermax (https://www.impermax.finance/) is a leveraged yield farming lending protocol live on Ethereum mainnet since March of 2021. It allows lending and borrowing liquidity using LP tokens as collateral. LP tokens holders can borrow the underlying assets of their LP tokens from Impermax to leverage their position. Thanks to its unique collateralization model design, leveraged yield farming can be done on Impermax with the minimal liquidation risk / leverage ratio.

User guide: HERE

Audits:

Impermax smart contracts were audited by Certik and Cyber Unit.

  • Yes, Seed Impermax TRIBE-FEI Pool with $1M FEI
  • No, Do Not Seed Impermax TRIBE-FEI Pool with $1M FEI

0 voters

2

Looking at the Imperimax value proposition, APRs are heavily subsidized by the IMX token, and without it the yield would be negative. This is indicative of a lack of product-market fit and value proposition.

Overall the concept is really cool, and I think we should keep an eye on how they develop and not allocate any PCV or tribe rewards at this time

3

Hi, I’m Simone Rigolon, Impermax’s Founder (and co-author of this proposal).
If you need any clarification about Impermax or this proposal don’t hesitate to ask me.

4

Hi, just wanted to mention that high borrow APRs on Impermax are a direct consequence of the IMX reward. If we were giving a lower IMX reward (like we’re doing for some pairs) we would have lower borrow APRs and leveraging would be profitable even without incentives.

In the particular case of FEI-TRIBE the yield from the LP token alone is much higher than any pair we have listed on Ethereum mainnet. I do respect your point though.

5

@JokerTheBond Thanks for joining our community and bringing up this discussion! I think it is still early for us to consider this, but would love to hear more feedback from you and other Fei community members

Instead of the DAO seeding liquidity is there an alternative? The specific mechanism for FEI-TRIBE LP could be useful for users

6

I’m currently uncertain about whether the PCV should seed the pool, but the product could be useful even without a PCV deposit.

Being able to borrow against LP tokens is generally a good thing. One issue is that people have been complaining about FEI-TRIBE being too liquid, and allowing leveraging may exacerbate that.

I think giving double rewards with IMX and TRIBE is a great idea. Do you have an estimate of how much IMX can be allocated to the pool, assuming 1M FEI is seeded?

7

We could allocate around 4,000 IMX per day ($460 per day).