I think the main issue is a lot of people feel burnt by the launch. For most, this due to ape like behaviour and now sentiment is bad. FEI’s initial impression, so fart, is not good and is hurting the teams ability to built trust in the ecosystem. Something must be done to restore the market’s trust (most participants being apes).
Right now, as a holder I have no use case for FEI other than to stake FEI-TRIBE LP for TRIBE incentives. Integration with other teams takes time, longer than what FEI Protocol has tbh. This means the solution needs to come from in-house.
If FEI-ETH LP staking generated APR, then there is a scenario that people buy what is essentially a discounted FEI and some ETH for a longer term view of generating a ROI via Liquidity Mining Incentives. This give FEI a use case that doesn’t exist just now and a reason to buy FEI.
Create another market for TRIBE to be purchased/sold and give the FEI-ETH LP token a use. Currently, there is flow from TRIBE >> FEI >> ETH - those that want out are being burnt by the FEI-ETH transaction. A TRIBE-ETH Pool will divert this FEI Sell pressure source else where. Perhaps even a TRIBE-ETH LP staking contract with APR to create some buy pressure on TRIBE which ultimately gets Arbitraged into the FEI price.
These things cost mostly TRIBE to implement via the incentives. This can be funded from the Treasury 40% TRIBE from Genesis and and the PCV ETH can be used to seed the TRIBE-ETH Pool. I would go with a 80/20 Balancer Smart Pool where FEI Protocol will receive BAL rewards for hosting the TRIBE-ETH LP token staking contract. These BAL rewards can then be used to buy back the initial seed TRIBE & ETH on market. This requires TRIBE from the treasury and requires minimal ETH from the PCV or via selling TRIBE on market. A dutch auction could even be arranged starting the pool at 98/2 and bringing it to 80/20 over a specified time period. Arbs again will try get in on the dutch auction, but the FEI-ETH burn fees will punish these users. A Smart Pool takes minutes to do and Aave Smart Pool is a good example. Even the Safety Module concept could be considered. SushiSwap is a quick mover and will probably provide Sushi rewards via Onsen. Otherwise, just keep everything on UniSwap as the market leader. I have contacts to help with above ideas, and my discord name is Fire #9177.
These ideas are quick to implement and then some of the other ideas can be implemented in time. There is also the added benefit the TRIBE token becomes more integrated within the ecosystem which probably already aligns with longer term goals.
As a stable currency, Fei’s self-correction ability is too low at present. People are unwilling to sell Fei on UNI, which will bring very little burn. And the buying behavior on UNI will continue to increase Fei’s issuance. The inability to trigger REWEIGHT for a long time is making people lose confidence. The original intention of REWEIGHT should be control the price within a reasonable range through system adjustments. If the price of Fei is too low, REWEIGHT will instantly pull back $1, causing violent fluctuations, which will only bring countless speculators but not a healthy stable currency system. REWEIGT should be more easily triggered to ensure the stable operation of the system.
#3 or #5 both seem to be effective, lightweight to implement and corrupt the original plans the least. Agree there needs to be action to release the current pressure, esp as there’s likely an impact on FEI reputation from those who got in for a quick buck without understanding how FEI works and now mightily annoyed. It’s their fault but the project doesn’t need the negativity.
First of all, a very interesting discussion - I basically read all of the 100+ answers above. Here are my thoughts:
I think the main mistake made from the team was the delay between distributing FEI and TRIBE to Genesis participants and the launch of FEI-TRIBE LP pool/staking. In my opinion if this was immediately launched after token distribution the FEI sell pressure would have been not that big.
→ . Let’s wait to see how the FEI-TRIBE staking rewards and the scheduled automatic reweight will affect the sell pressure and overall peg of FEI.
A comment by the user @len was made above that the protocol and reweight algo is flawed by design and a natural reweight could almost never happen when some specific conditions are met. There was also a similar thread posted by the user @fei.saver (The Way Forward).
→ Can someone from the team comment on that and clarify if that is the case? If so, what is the solution of this and how fast can the contract/algo be adapted so that reweights happen naturally?
Hours, Days, Weeks is a way too long timeframe for the peg to return back to where it is supposed to be. In crypto people move money a lot and the whole DeFi and liquidity providing sector is very dynamic. For wider adoption of FEI across DeFi it should return to the 1$ peg way faster.
→ Please consider re-adjusting the algos/contracts so that FEI goes back to its intended peg fast.
Put the PCV funds or a portion of them into some yield generating vaults (yearn, curve, compound, aave, sushi, anchor, etc.) and distribute a portion of the earnings to FEI and/or TRIBE holders. A stablecoin which actually generates yield just for holding - sounds like a nice concept to me and something that would incentivise me personally to keep my stablecoin funds in FEI and not USDT or USDC for example. Because I don’t get any yield/earnings from just simply holding USDT/USDC in my wallet.
The next problem I see with the Genesis event is that in the perfect scenario you created, users should commit ETH and pre-swap to TRIBE tokens. The users who pre-swapped their ETH for TRIBE are currently seeing their decision to do so as a mistake as they made a loss instead of a profit, as the effective price per TRIBE token these users paid was around 3,20$ if I am not mistaken. Currently the TRIBE token trades below 2$. Basically the users who did not believe in TRIBE can now buy TRIBE at a much cheaper price than the hard believers of TRIBE who pre-swapped ETH for TRIBE - they now feel betrayed and punished for their decision.
→ One way to clear this negative perception of your project to TRIBE believers who helped you bootstrap the PCV by committing ETH and pre-swapping to TRIBE is to find a way to airdrop FEI or TRIBE to those users to make up for their effective losses.
As a last idea to incentivise and reward people who participated in the Genesis and have not sold ANY FEI or TRIBE tokens since Genesis up to the date when the FEI peg was restored back to 1$ (sometime in the near future), you could make a snapshot of all Genesis participants’ addresses at the time and date when the 1$ peg is achieved and have the addresses of all the people who believed in your project (the hodlers), supported you during these hard FUD times by not selling any FEI and/or TRIBE tokens and do a retrospective airdrop to those users. This would:
a) help reduce negative perception of the FEI project;
b) create more awareness for the project as media will publish articles about the airdrop;
c) show the team’s appreciation during these FUD times and last but not least
d) make your supporters happier
Looking forward to receiving your feedback on my suggestions and thoughts above! Feel free to message me on Discord: mtanev#5639
Simlpe proposition: if FEI price drops lower then $0.99 it starts 1 hour timer before reweight. Sellers stop selling (they are willing to wait 1h to avoid being burned by fees). Buyers start buying (they want to earn rewards before reweight). Thus buying pressure actually pushes the price above $0.99 and reweight timer resets and stops until the next sub-$0.99 price. Thus price will be auto-stabilized even without the actual reweight happening. What do you think?
I was thinking the same. Currently FEI spends too much time below 0.99. It’s simple to just add this condition to trigger reweight: if FEI spends over x hours below 0.99, then the reweight function can be called. This is the same as what you are proposing.
This seems promising. But there seems to be a (intended) feature of the current protocol that is lost here. For example, what if the price stays at 0.995 for a very long time? The current protocol is designed so that even for a price that is very slightly less than 1, if this price is sustained for a long period of time, reweight happens. Of course, the reweight is not happening because of the flaw, but this seems to have been the intention. With the proposed protocol, reweight would not be triggered if the price becomes stable at 0.995.
Of course, you could have either condition trigger a reweight, but that would not be different from having only the proposed condition unless we do something about the flaw in the current condition.
With this many ideas maybe we are ready to direct our efforts towards actionable items now. I see that many people commenting are under the impression that the people that created the project can just change stuff and are putting the deciding pressure on them. There is, of course, a lot of pressure on them, however, this is a DAO ( I have the feeling 80% of the comments are unaware of this or are not acknowledging it when they ask for quick immediate actions). There has to be a proposal and there has to be a vote to do any changes to the protocol as far as I understand this. So if actions need to be taken quickly we need to start organizing this vote.
You are right, ideally price should be $1. But for the $0.99-$1.01 range current reweight system may be applied (perhaps a tweaked version - with faster reward growth rate, etc.) But if the price goes below (or higher) than certain point that signals about extreme conditions that must be dealt with (as we have today). Here my proposal should work. Trigger price can be $0.99, or $0.999 or whatever - it’s a matter to discuss. Also the reweight timer could be 1h or 1m or 1d, etc.
It sounds interesting idea. Why not making an auction to buy FEI? People can say how much discount on $ 1 they accept, if any. And you pay first the ones with the high need to sell FEI right now. Actually this is how central banks work in exchange markets.
Auction to buy FEI
We define how much FEI we would buy for testing
people send the accepted discounts
FEI fills the orders of high discount first, until we reach the amount defined for this auction.
If I may add to the list of things that went wrong, I believe there is one more reason for the current system to be destabilised. The airdropped TRIBE that was distributed during Genesis should have been time-locked. This way, it wouldn’t have been possible for bots to participate in Genesis, pre-swap 0%, claim their FEI and TRIBE in the very first block immediately sell TRIBE for FEI, their FEI for ETH and make a quick buck.
Like this bot alone drained 650ETH from the ecosystem:
And it wasn’t the only one. So if you ever consider “relaunching” FEI or if anybody else who is thinking to launch a similar design stablecoin, you should time-lock airdropped TRIBE. Obviously, TRIBE that is obtained during the pre-swap should be not locked at all. This way, there is no incentive for any malicious party to sell TRIBE right after the Genesis. And then you have more than enough time to create the healthy ecosystem with use cases for both TRIBE and FEI before the “free” TRIBE is unlocked.
I prefer 1 + 3 + 5. This is not a stabil coin atm. I didnt preswapped any eth but now i have nothing because dont want to exchange my fei’s with %30 penalty (this must be a joke). Stabilcoin with a %30 penalty ? Unbeliavable! Penalty should be less than %1.
I think, I bought a one way ticket to jail. If i can not exchange my fei usd when i need, why should I use it ? Now, I dont want to use fei any more.
Very interesting. But to be fair, the bot sold FEI at roughly $1 and TRIBE at roughly $3. Which was precisely what those who participated in the Genesis were willing to pay!
I was wrong at selling at 97 cents but it would definitley happen everytime it gets back to peg, there is going to be dumping from the people who bought it at discount and they are incentivised to continually do this everytime it reaches peg, guaranteed they have bots doing it which makes it impossible for most people wanting to sell their FEI for $1
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.
I think it would be a good idea to invite Sam Bankman-Fried SBF the founder of FTX and Serum exchanges to be part of the team, this man is genius and he will make excellent addition to the project.
I agree, the whole point of a stablecoin is that it holds its peg, no one want to hold a stablecoin that you cant sell at anytime because of 10-20% penalties. I can see why there is a high amount of criticism on Twitter. Incentivising people to buy at 95cents doesnt work either these people are going to dump at 99c / $1 everytime constantly driving the price back down.
Fire 