I’ve take a first shot at squaring needs of FEI, TRIBE, and team. This includes short-term: restoring FEI mechanisms, compensating TRIBE pre-swappers, and containing execution risk. It’s worth keeping in mind long-term value is derived from unblocking the protocol’s evolution, restoring goodwill, and ultimately restoring a truly stable stablecoin in a timely, durable, and orderly fashion. Let’s discuss.
Note: Collateralization ratio is the amount of collateral (reserves) which back a stablecoin. For FEI, it’s currently at 130%. This is considered good.
- Operate FEI as straight (non-algorithmic) fully-backed stablecoin for 7 days.
- Distribute any excess Collateralization (>130%) to TRIBE holders as a one-time dividend
- Set a period of 7 days.
- Protocol buys and sell FEI at $1. No DI. No burns/penalties. Straight fully-backed stablecoin.
- After 7 days, snapshot TRIBE holders. Dividend any collateralization > 130% to TRIBE holders. Offer in ETH or the difference minted in FEI.
What does it accomplish?
It clears the decks.
TRIBE gains immediate short-term distribution of “genesis profits” by dividend and long-term value from the cloud being lifted from the project.
FEI holders gain predictable liquidity to buy, hold, and sell.
- Restores confidence and confidence equals value.
- Rebases FEI as a stablecoin as intended
- Allows integrations to proceed to build value
- Rightsizes project in an orderly fashion
- Buys time to figure out algorithmic stabilization.
- Zeros out the arb opportunity in FEI for now
- Maintains collateralization ratio.
Aligns incentives. Separates short-term and long-term interests in an orderly fashion.
What’s in it for everyone?
- FEI holders - Confidence to buy, hold, or sell FEI
- TRIBE holders - Dividends out the “profits” from genesis. Long-term value. Mitigates some losses.
- FEI protocol - Rebases the protocol to a manageable size. Still overcollateralized.
- FEI Team and investors - A way forward. Buys time. Buys goodwill. Execution safety. Gets long-term holders on board. Leaves people not feeling sour. Your project doesn’t implode. Long-term $$$. You’re heroes not villains.
- Partners - Integrations, confidence.
There are are coding risks, mechanism risk.
Recommend this paring this solution to the simplest elements.
We’re exposed to a disorderly exit should ETH value quickly fall 20%.
Recommend spending a few % of PCV to hedge ETH risk.
The biggest risk is taking too much time (makes everyone mad, exposes us to market risk) or engineering overly complex solutions.
To the extent that FEI wants to continue as a stablecoin, it will eventually have to peg at $1. Any “foot-dragging” or trying to outsmart the market in valuing with random reweights or complex “undos” is going to get arb’d out of the PCV.
What won’t some people like?
- Doesn’t bring back the past
- Doesn’t “punish profiteers”
- Not fancy
Why should the community vote for this?
- It aligns FEI, TRIBE and long-term stakeholders.
- It separates out long-term and short-term holders in an orderly fashion.
- It can be explained simply.
- It can be executed quickly.
- Predictable over a time period. No arbing. No panic.
- It has less risk than untested algorithms made in the heat of battle.
- The alternative is to bleed slowly. Genie is out of the bottle. Everyone is mad.
- It’s the least bad solution
- Everyone gets something and is better off than they are now.
I can answer questions below. Thanks for time, looking forward to feedback.