Incentivisation mechanism: synthetic ERC-20 tokens called KPI options are airdropped to a selected list of the most active members of the DeFi community — thought and action leaders. The option’s redemption value is tied to an underlying Key Performance Indicator (KPI) of the protocol. Then at a certain latter date the option pays out a reward if the project’s KPI reaches a predetermined target before a given expiry date.
In short, a hypothetical scenario looks like this:
- Some significant amount, e.g. 50M of TRIBE either from the DAO Treasury or newly minted, is allocated as a frozen redemption collateral against the creation of 5M of KPI Options. Some amount of FEI can also be alloted.
- An appropriate KPI or a panel of KPIs and an expiry date are designated: e.g. FEI 24h trading volume in 6 months from now.
- KPI options are airdropped to selected members of the DeFi community subject to past behaviours or interactions within the DeFi space.
- At expiry options are allowed to be redeemed for TRIBE/FEI on a sliding scale dependent on performance of the selected KPI. For example, if 24h trading volume was chosen, and it was below some pre-set lower bound at expiry — e.g. $300M — the options would be redeemable for 1 TRIBE a piece. Conversely, if 24h trading volume was above some upper bound — e.g. $3B — they would redeem at 10 TRIBE. Any value in between would lead to redemption determined via linear interpolation. Alternatively, they’re offered to be (partially) exchanged for the next round of KPI options on preferential terms.
- TRIBE tokens not bound for redemption are returned to the Treasury.
Possible criteria for a whitelist of participating addresses:
For a small number (to avoid unnecessary dilution) of leading/promising protocols:
- Addresses that participated in governance voting on Snapshot/Tally;
- Top Discord/Discourse contributors;
- Top Github repo contributors.
Possible participating communities: UMA, Maker, Bankless, Liquity.
Plus top FEI contributors/participants.
Possible FEI KPIs:
- (rolling mean) 24h trading volume;
- (rolling mean) Market Cap;
- (rolling mean Market Cap dominance;
- (rolling mean) Trading volume/Market Cap;
- Market Cap rank;
- (rolling mean) PCV size;
- (rolling mean) Real PCV size adjusted for market fluctuation;
- (rolling mean) User circulating FEI;
- Number of integrations;
- Particular integration on a certain important platform — realised in the form of indicator function (yes/no). Introduction of tools like rolling mean can serve to incentivise against short-period manipulation around expiry date.
Obviously, whitelist details should be kept secret until after a snapshot is taken to prevent everyone flooding into the path of least resistance in time to qualify.
This approach drives interest of the most active and capable part of the DeFi community in contributing to FEI’s productive organic growth without triggering immediate dump. It also builds up a strong FEI DAO community.
Plus it could also bring nice publicity.
UMA has already tested the waters and built infrastructure for this.
I think this can be realised after DIs are reinstated, but this is a serious endeavour, so I suggest we start the discussion now and if, hopefully, we converge to a decision, I’ll draft an official proposal as well as UMIP for UMA to include TRIBE and FEI to the list of acceptable collaterals, will prepare KPI Options contract and we’ll follow through.