The current situation is very interesting because it provides insights as to how the protocol behaves by itself in emergency situations.
The PCV is still not diversified / protected by options / etc, so what we have right now is a sneak peek at what would happen if ETH/USD went down 50% overnight. The protocol would be untercollateralized, so a lot of people would want to sell FEI to get out ASAP, similar to this post-IDO situation. I think it’s good that we let things play out for a bit and experiment with the reweight trigger conditions in the next few days.
Of all the suggestions, I have a preference for 3/4.
But let’s see how people in this thread feel so far :
Post-launch peg propositions
- 1- Force reweights using the Guardian to allow people to sell. Will be a bit clunky because it would slingshot up and down, but this can be done immediately and communicated via twitter etc.
- 2- Increase the growth rate of incentives. This could end up in a situation where there is a lot of buy support and inflation but keeping the price low around .90. Can be taken straight to a DAO vote.
- 3 - Setting a pre-defined cadence for reweights such as every few hours, or every time the price goes below some %. Requires a minimal contract change and DAO vote.
- 4 - Using the reserves to stabilize the price more directly by selling ETH for FEI with some spread below the peg price. Requires more substantial contract changes but can likely be written, reviewed and voted on within 1-2 weeks. This creates a price floor on FEI and could be low like .95.
- 5 - Capping the burn % to something like 2-5%. This leads to faster reweights and makes integrations easier.
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