We have discussed the tradeoffs of various implementations at length. I’ll condense here the summary of what I see based on the above comments and we can take this to a snapshot vote.
A reweight recently occurred which reset the spot price and reward rate, and then was immediately sold back down to a >3.5% deviation and 10% penalty.
Forcing reweights or increasing reweight cadence through options 1 and 3 would help after a number of reweights but also unfairly advantage bots in the short term.
Increasing the growth rate of incentives through option 2 just contracts the current status quo making it iterate faster. This would be slower to recover the peg and relieve the sell pressure than 1-3 but may make sense longer term.
Capping the burn and mint % to something reasonable like 2-5% will help make the FEI-ETH uniswap price closer to the secondary market price, which makes oracles more accurate for integrations and doesn’t punish selling as severely. It would also make reweights occur faster when further below the peg as the reward can catch up to the burn.
Selling the reserves with a fixed discount (say 5-10%) or an auction would create a price floor that can allow out a lot of the sell pressure and be increased over time to restore the peg. I think doing this in combination with potentially some of the above will be the healthiest and fairest approach.
Longer discussions on mechanism changes will be required but implementing one or multiple of the above in the short-term can help alleviate the sell pressure and restore the peg while preserving PCV. There were a lot of other great ideas discussed that are less well understood and would require more planning and testing before implementing.