Focus on PCV Growth Instead of Dividends / Buybacks

There has been a lot of discussion on Fei’s discord and discourse about how value accrues to Tribe token holders. In these discussions, many community members suggest creative ways to earn yield on PCV. Some of these creative ways include: Yearn vaults, ETH 2.0 staking on Lido, Aave/Compound deposits. I love these ideas and think they will effectively grow the protocol.

The next question is, what does the community do with this earned yield? A number of community members suggest we return part or all of that earned yield back to Tribe holders in the form of a dividend or buyback. I get the argument that it signals to the market that you can earn income from holding Tribe and people think that will lead to price appreciation. However, I disagree and think that we should not distribute earned yield to token holders for two reasons. First, the fact that we can vote on an action like this should be enough of a signal that Tribe holders can earn yield if the community chooses so. Second, and most importantly in my opinion, returning yield back to Trible holders is not in the best long-term interest of the protocol because it eliminates the immense benefits of compounding the PCV.

Let’s expand on the second point. I think the power of wielding a massive PCV is underestimated, and Tribe holders should use the benefits of scale to grow. For example, community members have suggested using a portion of the PCV to purchase governance tokens of a lending protocol such as Compound in order to vote to integrate Fei into the platform. This action is easier to take if the PCV is larger, and it increases demand for Fei, thereby generating additional upward pressure on PCV growth. Now during this process, let’s assume there’s some other portion of the PCV locked in a Yearn vault earning yield. As a token holder, ask yourself this question, “Would you rather use that earned yield to return value back to Tribe holders or would you rather use that earned yield to accumulate tokens of another lending protocol (e.g. Aave) and vote Fei into that lending platform?” If the community chooses the latter, use cases for Fei will grow more quickly, creating a flywheel effect for the protocol’s future growth. More integrations lead to increased Fei demand which leads to greater PCV growth which leads to greater scale to execute more integrations…and on and on we go.

My point is that there are so many growth opportunities for the protocol, and long-term holders will realize more upside if the protocol reinvests and compounds earned yield instead of returning it to token holders.

Community thoughts?


I agree that the PCV should not be used to directly compensate share holders (ie TRIBE), the closest analogy of our current situation is that of an early stage start-up. Dividend and share buybacks are for late stage established companies, not at all appropriate for the current situation.

There should be no disagreement that the most efficient use of capital right now is to grow the business organically. Though the exact measure to go forward with that still needs to be debated; I am of the opinion that the FEI is in the most lucrative business possible already: money printing. Therefore it should never invest the PCV into other ventures, but fully deployed to maintain the stability of FEI itself.


I agree. @cozeno’s start-up analogy is a good one. The anticipation of future buybacks should be enough to support the price of TRIBE.

I think it’s possible that even after a solid reweight mechanism is implemented, FEI still trades at a discount relative to the peg because of the inherent risk of under-collateralization. Letting the PCV grow could help us reduce this discount.


I’d like to say I disagree. I intend no disrepsect here, and this is entirely my own biased opinion.

First the assumption that paying dividends to TRIBE holders is

not in the best long-term interest of the protocol because it eliminates the immense benefits of compounding the PCV.

is wrong. There’s a balance here that can both feed back into supporting the PCV aswell as accruing direct value to TRIBE holders/stakers. I would even propose a mechanism in which the yield earned by the PCV is only paid out to FEI/TRIBE stakers, as I believe those are the participants with the most skin the game, but that’s just a random idea.

Second, I think the easiest time to establish TRIBE’s revenue generating scheme is early on. It demystifies the speculative value for the protocol and give capital managers a way to price the asset using cashflows instead. For all transparency sake, my opinion is definitely biased from Sushiswap, based on the cashflow generated by sushi stakers from protocol wide fees. Uniswap has yet to activate fee capture and I see it as a major governance hurdle.

I’d be very happy to see active initiatives to generate cashflow directly to TRIBE or TRIBE/FEI stakers and I do not see it as a black and white situation. (aka all the yield goes to TRIBE holders or all the yield compounds into PCV ) Regardless I’m really really happy with the level of engagement on the governance forums hopefully we can all figure out a solution that makes sense, open to criticism :turtle:

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Variant fund (Aave’s Stani Kulechov is a partner) & Robot Ventures (Compunds’ Robert Leshner is a partner) are Fei’s early investors. Both Kulechov and Leshner are on Fei’s discord. I’m confident talks about integration are already on their way. No need to knock on the open door.

Plus I have serious doubts about this delusional idea that you could buy yourself into some integrations. All protocols have their respective communities with investors and founders with significant shares & influence. You’d have to persuade them and not just use gigantic PCV to make any decision you want.


I think we should have the ‘growth fund’ to achieve a few objectives given the still early stage of this protocol:

  1. To use the PCV to offer grants to the community for investment/growth strategies (some DAOs call this the strategist fund). This incentivizes people to look at ways to growth both the financials and also the so-called ‘moat’. Having an active community is actually very important to the success of the protocol and PR - this rewards them that.

  2. To use the PCV to invest in tokens of other DeFi protocols. This is a two-fold strategy where we can maximize yield and also get into integrations with them, because when we buy their tokens we are investing in their governance and hopefully provide a say on proposals which will benefit Tribe.

  3. I do agree that we need some ongoing value-add to existing TRIBE holders. I wonder if there are ways to turn TRIBE into an interest-bearing token. However at this point maybe we can surmise a small percentage of growth (say 10%?) for this.

Given the above, I think at this point we want to maximize our PR and growth potential so split between the 3 points, we can start with a distribution of 30/60/10. We can tweak these percentages with DAO votes down the road.

Any input would be appreciated!


Compound and Aave were just examples to illustrate a point. They are some of the most well known defi protocols, so it’s easier fir a broader audience to follow. Insert whatever protocol for your own example if you’d like. I still stand by my suggestion.

To your point about the idea of the DAO voting Fei into other platforms being a pipe dream, I disagree. The priority right now is security and peg stabilization. If that happens and Fei is able to maintain its $1 peg, why would a lending protocol be opposed to the DAO voting itself in? It’s a mutually beneficial proposition that will likely have that community’s support. For example don’t you think the Aave community would want to add a stablecoin of Fei’s size to their protocol? Do you have some good reasons why they wouldn’t want that?

The above assumes Fei reaches and maintains peg

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Compound & Aave are not just the most well known, they’re by far the biggest. Evidently, as soon as Fei starts working properly, Compound & Aave integrations will be announced. Smaller competitors will most certainly follow up, because nobody will want to lag behind the competition. Plus, I’m sure more talks are in the pipeline in stealth mode now. @Brianna could enlighten us on this, if she wanted to.

As for this “DAO voting itself in”. You don’t need PCV to make suggestions to communities. Just go there and talk to people, persuade them. Maybe buy a few tokens to initiate a vote. You’ll also need to get founders & investors on your side.

Essentially what you’re suggesting is to try to use multibillion PCV to hijack other protocols “to vote to integrate Fei into the platform”. My point is that first, it’s not necessary, and second, it won’t work, because you won’t get enough votes with PCV alone. And if you need to cooperate anyway, then why do you need PCV after all? Plus, it’ll be bad PR-wise.


I liked this idea.

You could use part of the yield earned to buyback TRIBE. When you implement the model of buyback and make, you could use the buyback TRIBEs to incentivize behaviours. For example, you could use these tokens to increase rewards for liquidity provision of FEI/TRIBE and maybe also other pairs FEI-token (eg.: DAI).

This way you are using PCV to create incentives for the market, which could increase the buying pressure for FEI and increase TRIBE value in the long term.

This would be a more sustainable way to create incentives rather than just spending the 400mln DAO Treasury.

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Example of two DAOs working together to form a partnership. I didn’t say anything about “hijacking” a protocol. There would obviously be engagement with the other protocol’s community to initiate the process.

Also, is it even a bad thing to accumulate tokens in blue chip DeFi protocols to diversify the PCV? So Tribe DAO diversifies PCV to purchase tokens of another protocol while also using those tokens to vote for a Fei integration.

I’ll ask again. If Tribe uses PCV to diversify itself and buys a protocol’s tokens, then uses those tokens to initiate a proposal and then vote on said proposal, why wouldn’t that protocol want to integrate Fei? Is it not mutually beneficial? If both protocols are better off, how is that bad PR?

If your rebuttal is that it’s a pointless exercise because Fei would be integrated anyway, then I guess we’ll just agree to disagree.

Lastly, the whole point of the post was to highlight my opinion that I think it’s more important to grow PCV than return PCV yield back to Tribe holders. I brought this up because I’ve seen multiple conversations about partially or fully returning yield to Tribe holders. As a Tribe holder, I’d like to see that yield be used differently, so I voiced my opinion. You’re trying to rip apart simple, illustrative examples and missing the main point of the post.

OK, you’re saying PCV should only be grown and not spent, even partially. I disagree, I think if PCV yields are partially returned to Tribe holders, particularly rewarding/punishing certain Tribe-related strategies, thus nudging certain desirable behaviour patterns in the interests of the Tribe, it will bring more value than just lying idle in the vault.

Now, you’re giving some arguments regarding what should be done with these funds. I’m discussing your arguments.

Again, I fail to see why you need PCV to initiate a discussion.

You’re mixing things up. Diversified PCV funds allocation is one thing. I’ve even penned a couple of posts on this matter. Using these funds to buy yourself into some integration is a different story. If you want to initiate a discussion or a vote, you don’t need a billion-sized PCV. If the community agrees with you, again you don’t need a billion-sized PCV. The only situation where you need PCV is when at least a significant part of the other protocol’s community is against this decision, yet you push the decision leveraging your super-whale share bought for $ from PCV.


Assuming Peg is restored and FEI reweight and incentives work as foreseen;

  1. PCV growth will come from new users putting ETH for FEI.
  2. PCV will grow by adding new bonding curve for other crypto assets.
    This is printing money with diversified PCV

PCV will then built a strategy to diversify a portion of its holding to stake in various win win projects… Any portfolio earnings should be reinvested…

Revenue for Tribe holders should come from transactions and be distributed to FEI-TRIBE staking…

TRIBE holders should enjoy capital gain until maturity of business and small TRIBE dividend should paid interim…

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Enjoying this discussion with you.

I agree you don’t need PCV to initiate discussion, initiate a proposal, then vote on the proposal. I do think it could expedite the process so it doesn’t hurt to do so. But point taken.

I also really like your idea of designating investment stewards from the community to prudently allocate PCV.

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I liked this idea. One of the things buybacked TRIBE could be used is to increase the incentives for liquidity provision. Liquidity is key value for a project that want to be the stablecoin for DeFi. It can create a virtuous cycle, as more liquidity can increase the demand for FEI, increasing the PCV.

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I disagree with this. PCV growth should happen organically as well as with earned yield. However that does not really mean we can’t give a part of the yield to TRIBE holders in the form of dividends. A governance token paying out regular dividends from profits will give us a lot of credibility in DeFi. Looking at YFI’s periodic reports on earnings, they’ve been setting a ridiculous high benchmark which is never seen across crypto. Yield isn’t the only way PCV will grow, there are other ways too.

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I agree PCV should not be used directly for Dividends. PCV is the equivalent of total cash holdings of a company. No company pays dividends out of total cash holdings. However most good & trustworthy companies do it thru revenue & profits, and the ones that havent set that straight early on struggle on setting that up (See Facebook in traditional markets or Uni on crypto markets) later on, when there is more value invested in.

A healthier perspective on this would be to see what portion of the PCV will be revenue moving onwards & how much of it does the protocole want to keep in as profit vs how much to invest in growth. If there will be more use of the platform’s existing features later on, for eg more pairs to swap between. Or new dapps on the platform like Sushi’s bentobox, we can see even easier options on where that added revenue could come from in near future. This would give us better perspective into how a form of dividend can be designed & in what stage of company adressing the “growth” comment in top message.

This is a smart idea by design. Hits many targets in one go. Keeps more stake in the system. Incentivises being in the protocole rather than being a holder of one or other token.

TLDR, we should defly not use PCV for dividends, but see what “moving percentage” of PCV will be meaningful as net-profit. Once we have an idea on that, we can see what is excess “in revenue” that can be used to incentivise being a shareholder of this company. As Siddarth puts out YFI does an outstanding job on this and sees a lot of value out of it.