Idea: Tender Offer for Team and Investor Owned FEI/TRIBE LP

Fei protocol is currently facing significant pressure on collateralization ratio due to declining value of PCV assets. This stress will only increase if/when Rari hack compensation is approved.

One possible way to relieve this pressure would be to buy back FEI/TRIBE Uniswap v2 LP from the genesis IDO allocation. My understanding is, these LP are vesting to founders/team/investors on standard vesting schedule, and they comprise part of the user circulating FEI (currently around 50 million FEI). This is somewhat problematic, as these insiders have lower price exposure to TRIBE and protocol equity vs public market genesis investors and TRIBE purchasers after genesis.

One way to help lessen potential incentive alignment issues while also improving collateralization is a tender offer of TRIBE tokens (from treasury or newly minted) to buy back these LPs from team and investors. For example, Fei Protocol could offer 2x the amount of TRIBE currently held by these LPs to repurchase the LP tokens (roughly 540MM TRIBE), and then withdraw the FEI and TRIBE held in the LP from circulation. The TRIBE would then have the same remaining vesting terms as the LP tokens.

The net impact would be selling roughly ~270MM TRIBE (vesting) in exchange for ~50MM FEI. This would align incentives and significantly bolster FEI’s balance sheet.

I’m not aware of the precise custody/admin arrangements over these vesting contracts or if they can be changed. In tradfi these sort of tender offer exchanges can often be implemented on an entire class of investors after supermajority support, but in defi it may require unanimous agreement (or possibly the tender offer would only apply to investors that accept the deal). But, I think there’s a strong case to be made that this would be value accretive to both the protocol, team, and private investors by putting the protocol in a much stronger financial position.


I am in favor of this as a post genesis Tribe purchaser.