The current TRIBE staking rewards are not providing sufficient utility to the FEI ecosystem for the associated costs. This proposal aims to provide TRIBE holders with more control over exactly how these rewards are distributed. Using a fork of SushiSwap’s incentives system we can provide TRIBE rewards to multiple tokens and adjust the rates as needed.
Currently Fei Protocol is issuing TRIBE rewards at a rate of 3.4M per week (~$2M USD) to incentivize FEI-TRIBE liquidity on UniswapV2. The liquidity provided for these incentives is currently $90M. This liquidity is largely redundant, as there is an additional $180M of liquidity that is vesting over 4 years from Genesis. The FEI-TRIBE volume is also not particularly high. It is about $14M over 7 days, which is ~5% of the volume on the FEI-ETH pool.
Gradually redirecting these TRIBE rewards towards pools which help the peg or FEI utility in other ways will provide more benefit to TRIBE holders.
SushiSwap uses a contract called MasterChef to distribute rewards to stakers of SLP (SushiSwap Liquidity Provider) tokens. It allows the Sushi team and community to distribute rewards from the total Sushi inflation towards different liquidity pools. They adjust their rewards for both long-term incentives and temporary liquidity bootstrapping programs. This model has proven to be largely successful and has helped establish SushiSwap as a top 3 DEX by TVL.
Transition our current staking rewards from FEI-TRIBE LP to the “MasterChief”, the Tribe’s version of the SushiSwap MasterChef.
The MasterChief distributes a constant amount of TRIBE rewards per block. The initial TRIBE per block will be 50. This would be a 33% decrease from the current reward distribution frequency ~75/block. Every quarter the Tribe will update the rewards distribution by subtracting 5 from the TRIBE per block. This would reach 0 after 2.5 years, a slight extension on the current rewards schedule.
The distribution of rewards can be adjusted to the highest leverage FEI and TRIBE deployments for the protocol as needed.
The initial deployments to incentivize:
- FEI-TRIBE LP - Existing
- FEI-3Crv on Curve - Curve Integration
- Saddle decentralized stables pool
- FeiRari Fuse deposits
- For example fTRIBE rewards would effectively be single TRIBE staking with the possibility for leverage
This approach would require current FEI-TRIBE stakers to unstake from the current StakingRewards contract to transition to the MasterChief.
The proposed reward distribution will terminate after ~2.5 years. In the future we can consider extending the reward distribution duration to reduce the short term TRIBE inflation impact.
- Increasing the duration by a fixed amount using smaller distributions over a longer window
- Perpetual TRIBE inflation of around 2-3% (similar to Uniswap). A portion of this, for example 50%, can go towards liquidity rewards in perpetuity.
- Reward halvenings so the rewards continue on indefinitely, smaller and smaller each year (similar to LQTY).
Further discussion will be needed to determine which options, if any, are most favorable to the protocol.