Question to the team: do you consider stopping the system ASAP and reworking it? It’s clear that malicious agents are interested in swinging the price as wildly as possible. Bots are buying FEI with bonus, inflate supply, then after reweight they drop the price down. Penalty is 50% now, so reward rate will also climb to that point. Then bots will buy and sell at any price higher than they bought. Effectively driving us back to 50% fee. System is unsustainable. Should be stopped. Rewards should be nullified ASAP, bots should not earn 50% daily! And people should see the way out.
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Lock the Tribe Airdrop (10% of totale TRIBE) for 1 year. Who sell FEI/Tribe before that will lose the airdrop and it will be redistribuite betweend genesis partecipants that have hold FEI/TRIBE and preswapped. Every whale who sell now, waiting for the FEI price to be back at 1 USD, will exit the protocol with nothing in hands.
Why team just not stoped this project?Now its obviously that project failed,and you just gave out tons of users money on every reweight to bots,stoped it if you dont know what to do.
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To keep the conversation on topic:
I agree with 1 and 3.
I also think that capping burn and mint to help integrations is a great idea, as non penalizing use of FEI elsewhere is important for use cases.
Selling some reserves for the price floor is also good.
Essentially, a mix of some of these solutions is going to be the best short and long term IMO.
I don’t know what you’re waiting for. Please immediately implement plans 1 and 3 and stop robot arbitrage. Either admit defeat and reclaim everyone’s FEI at 0.99
Instead of suggesting random stuff that likely makes things only worse, a good plan could be
- Hiring experts, who know what MEV is
- Building models
- Doing the simulations
- Fixing the protocol
But at this point the only solution is to stop the protocol. And give how much possible back.
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Think this is being proven correct. The direct incentive being created here by rebase is to sell fei
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Yes why ask random ameteurs.
Ok i know that its hard decision but we only lost around 10% of PCV from genesis,i think team should stoped the project and made refund to people,-10% of ETH its not so critical for now yet
There are two core issues that need to be addressed.
- Lack of confidence in the ability for Fei to keep it’s peg
- A large amount of Fei held by short-term users who want out, but will not accept the current rate
My proposal: Using the reserves to create a price floor on Fei only if Fei remains below that floor for at least X% of the blocks in any consecutive sequence of Y blocks. Floor should be at least $0.95 and the buying period could last for some period of time or until a specified amount of eth is spent. For example, if the floor was $0.95, X=80%, and Y=6500 (rough number of blocks mined per day) then if the market price was below $0.95 for at least 80% of the day the floor would kick in. These variables are just examples and this proposal would benefit from community feedback on optimal values.
This mechanism is a variation on #4 proposed by Joey, but has some benefits. By providing a promise of a price floor if needed, traders’ expectations about future price change. They now know that they will have ample opportunity to sell for at least the floor price, so they will be incentivized to buy for any price under the floor. This leads to the price moving up to the floor, potentially without the reserves actually needing to be used.
Those purchases, helped by the reserves if needed, can soak up a lot of the Fei that people want to sell for above current prices, but below peg. These funds are preventing reweights from doing their job. Currently, as soon as a reweight brings the price up to a level that those who want out find acceptable, some will dump to move the price back down. Reweights give too short of a window to properly allow these users to exit the market.
This would be more cost effective than just immediately implementing a floor since many of the Fei purchases would be executed by traders rather than by using the protocol’s ETH. This makes it a more sustainable incentive, which could continue to be used and increases people’s confidence that they will be able to sell at least somewhere near the peg. Having this floor mechanism helps prevent a bank run/death spiral scenario, further increasing confidence. That increased confidence has a flywheel affect making more people willing to buy, increasing the efficacy of the buy-side direct incentives.
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This is one of the best ideas I’ve seen so far.
I have some ideas want to share with you,maybe they can change the situation.
- Stop giving fei as mint reward, giving them tribe instead (with lockup,maybe 1 week or 1 month ), and let the seller pay the burn with tribe rather fei.
that can pull up the price of tribe, and more value will get into PCV.
just like what the makerDAO did.
what 's more those value can be used to reweight the price of fei, so we can make a value circle to protect the price of fei.
2.with the step 1, now we will have enough value to raise the price of fei to 1$.
then we need to keep the price in 0.99x—1.00x, to build market confidence, let the fei holder calm down and not get mad in swapping their fei to ETH.
we can reduce the time interval to reweight, maybe just 10 mins or less. and we can change the TWAP.
@joey
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I created a separate thread to discuss a possible solution to the peg problem here : [EthReweightQueuer] Proposal to improve reweight mechanism & maintain peg
This thread is getting pretty big so I think we can have discussions on specific proposals in different threads & bring back a synthesis here ?
The reweight could be made more “sticky” to avoid the instant sale that occurs afterwards.
One option to do this would be to not immediately reset the sell burn rate to 0 after a reweight - but instead slowly decrease it as long as the price stays above the peg. This would keep the price closer to the peg for longer, helping to reset the psychological value of FEI closer to its peg.
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I think we need to initiate and adjust the burn strategy as soon as possible. The longer the time, the anxiety caused by being trapped will not only destroy the confidence of the holder, but also the confidence of those who want to hold the fei. No one wants to be burned free because of holding Fei.
Currency, especially stablecoins, if they cannot be freely exchanged and flowed, then this fire cage will trap oneself to death.
So we should solve it in a few days instead of a few weeks, otherwise there will be big troubles.
The problem is A.) Risking the PCV with bad immediate game theory hotfix = 100% disaster / loss. B.) The people selling at a loss are actually increasing the FEI / PCV ratio.
I didn’t completely understand what you are saying at first, but reading it for a few times, this actually makes sense. I am thinking of it using an example: let’s say FEI is 0.9, (the burn would have been 100% under the current set up), but now say burn is capped at 5%, and so is reward.
scenario 1: If no one buys or sells, the reweight probably happens in a few hours (which is still not fast enough imo, but the burn cap can be reduced, or the base rate can be increased).
Scenario 2: if someone buys, then FEI start to go up to say 0.92, and burn is still capped at 5%, and reward rate would drop due to buying. That might discourage buying. Yet then the reward would resume growing, and eventually reweight would happen just like scenario 1. So in case of buying, the reweight happens, but much delayed.
Scenario 3: if someone sells. (which under the current situation, a lot of people would sell with capped burn). the price of FEI goes down to 0.88. selling doesn’t affect reward rate afaik. Eventually reweight happens at the same speed as scenario 1 because now the burn rate goal post is not moving away. This very fact would probably deter selling and encourage buying, which then would delay the reweigh as in scenario 2.
I think another crucial aspect of the problem, is that buying fei delays reweight, and that’s counter-intuitive. The dilemma with buying is this: on one hand, reweight shouldn’t have been necessary if there is enough buying. On the other hand, buying should be encouraged/rewarded when below the peg, and that reward should be realized quicker after buying instead of delayed.
I think to address the problem of delay with buying which led to the prolonged time under the peg, the time can be a trigger in it self: if FEI spend x amount of time (hours, minutes…) under the peg, then a reweight can be triggered.
And that coupled with capped burn and mint might help make FEI more stable.
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Excellent idea, wish team could see this
A guaranteed price floor is conditioned on over-collaterization though, because if ETH halves, then a bank run could still happen because that price floor can’t be guaranteed.
In an ideal world, if ETH’s price never changes, then it’s a simple problem, you just have a contract to sell FEI at 1.01 and buy FEI at 1 and done. FEI’s price will always be between 1-1.01 and the contract takes the spread as a profit. But if the collateral drops dramatically in value, then that lower floor can’t be maintained because there isn’t enough collateral to buy back FEI at 1. (or 0.95)
And you can’t really use other stable coin as collateral, because then FEI will just be a meta stable coin that depends on the peg of other stable coins, and not a stable coin in itself.
Any sort floor price can only be temporary because of the fluctuating value of the underlying collateral. I think the current situation calls for setting a temporary floor price to let people exit though.
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I think the over collaterization is also why we need to act fast. While Eth is high, we are overcollaterized but if eth drops then suddenly we are undercollateralized and if that happens, fei will never return to peg besides the split second it is reweighted. At that point, we are just in a downward spiral. Need to act fast now to get rid of sell pressure so if we become undercollateralized there won’t be the bank run since all the people who wanted to be out are already out.