Maybe rather than commit to a cadence change you should do a one off reweight to see how effective reweighting is. Think it will be a short term return to peg and will be back here again with fei burnt. If could make fei yield bearing by using PCV to generate yield then using at least part of that to buy fei and drop it on fei holders that might create incentives to hold fei
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Yeah agree the issue is demand. Protocol designed to deflate back to demand which is far less than circulating fei. Still not sure more frequent rebases doesnt just create a faster deflationary spiral toward demand.
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This is a valid point.
At the same time, the baby is live now, and needs to be performant to current holders too.
If its utility stems from having peg 1, shouldn’t efforts lead towards getting peg fixed asap?
It won’t get integrations if it doesn’t deliver on peg promise.
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Thinking this through : this action will soak up the selling pressure from ppl who invested in Genesis to get the free Tribe and have no interest in holding FEI longer term.
Ultimately for FEI to hold its peg long term and not require frequent intervention, there should be use cases beyond being a LP and speculation on Tribe.
The team should focus on building out these use cases asap…DAI has many integrations even though it doesn’t hold its peg!
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Use cases are the most important thing for a stablecoin. I agree with your sentiment overall but having all this latent sell pressure is really bad for the peg. Being more stable than we are currently will help get the integrations
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The main goal right now should be to establish a stable 1 to 1 peg (or within a very narrow bound), since leaving Fei’s price at ~$0.90 will severely limit Fei’s long-term adoption as a reputable collateral. We’d expect PCV to drop in the short-term as selling pressure is released, but that should stabilize as the protocol is over-collateralized and additional demand arrives when staking begins, new integrations happen, etc. However, new integrations would be difficult if Fei’s market value is so far off from the peg . We think that sacrificing PCV in the short-term to preserve long-term viability of the protocol is a worthy tradeoff.
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A combo of 3 and 4 seem good. You could increase the amount of reweights now. After the sell pressure decreases, having additional eth in reserve will allow the dao to fix the peg and benefit from the bonus at the same time. Most importantly, I think some public comms at this point to let users know that this is being worked on.
In the short term, the protocol must focus on:
- improving perception by enforcing the peg with more frequent re-weights and perhaps the increase of the growth of the timeweight variable;
- allow for the sell pressure to flush out as soon as possible as the protocol does not benefit from holders who have no interest in holding the coin.
Afterwards, focus on the medium/long term solutions by bringing more use cases and partnerships for FEI. This will increase demand and assist with the holding of the peg.
Option 4 seems like an unnecessary over-complication for the short term solution at the moment.
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“How to create demand for $FEI” ? any further plans on integration with other protocols ?
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Joey, how big would the reweight be? How to gauge the volume of the FEI buyback?
I think it’s premature to say that FEI lacks of demand, or usability and stability when it’s literally just 1 day old. There will likely a lot more use cases and demands down the road in various defi applications, they are just not there yet at day 1. DeFi is fast, but not This fast.
In terms of stability, it’s normal to expect volatility and kinks to be ironed out right after genesis. and it looks the purpose of this very forum post is to do just that.
Fair point about the liquidity window though, it’s concerning that one cannot really sell FEI at 0.99 without incurring burn which means that the actual price would be more like 0.98 (or worse). maybe the burn window can be shifted such that there is no burn between 0.99-1. and the burn starts at 0.99 and below.
I think FEI design is really brilliant, but there are things that can be tweaked to make it work a lot better.
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It’s really low, since the protocols owns all, if not the majority, of the UNI pool. They can withdraw the liquidity and rebalance with new weights (or do a small trade if other people are LPing in the pool).
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I agree Joey, I remember one thing from your interview, you said something like;
“Frax is our biggest technical competitor and DAI is our biggest adoption competitor”.
In DAI case they have all possible use cases, no doubt FEI’s target is the same. And we need liquidity and stability for possible use cases.
I don’t know what is in the pipeline and can go in tandem with just relying on the current functionality, I’m sure team you have the highest authority on the information about the possible use cases. If you think they can go in tandem with the protocol then we don’t need to take any immediate action imho, just letting things to go as they are supposed to go.
Otherwise, I think the immediate target should be the combination of a mechanism that creates demand for FEI, light of being able sell the FEI at ~1 and becoming for being able to be implemented by other platforms, and these should come without those possible use cases.
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I am definitely for option 3… It will be great for credibility of project…
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I agree that over the long run, especially with Uniswap v3 concentrated liquidity feature, the Protocol will be able to provide a deep liquidity pool and remove the burn from the low volatility tranche.
- is more complicated but also much cleaner than reweights which will be front- and back-run. I think having a floor with a relatively high spread (say .95) is the healthiest way to restore some normalcy
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Who in the right mind , or what protocol would ever use fei with the disgusting burn rates put into place ? You can NOT make a single use case for fei until fei manages to maintain its peg & even after , you can not have such high burn rates.
What protocol would put their funds at risk knowing that this algo shitcoin can potentially burn itself after the slightest amount of selling pressure .
You literally took In a BILLION and you instantly failed to maintain the peg and have not even got up to .97 cents.
Increase the mechanism required to bring this algo back to the peg. Given the fact that you’ve literally burnt on avg 20%-30% of apes $$ , why are these funds not spent on driving the peg back up ? What are you guys doing ?
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We need all of 1-3. Fei is supposed to be a stablecoin, and if users don’t have liquidity at $1, then it is failing as a stablecoin. The longer it stays this way the more it will damage Fei as a stablecoin.
Not just about restoring normalcy; you’ll also have to retain normalcy.
You have a point. As mentioned in another post above, if decided, even the announcement of this would provide some stability - people will calm down and know that there is no reason to take the huge burns now.
However, I don’t think you should discount the re-weights completely. They can be useful in the current climate by allowing some desperate people to exit. You should NOT announce in advance as then for sure the bots would be prepared to take action. Perhaps 1-2 re-weights are all that it is needed. After the first few, the bots will again be completely prepared. Personally, analyzing some interesting transactions and wallets, there are still very few bots in position for this now, so there might be a time window for you to use.
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