I’ve put forth a lot of proposals. I’ve invested dozens of hours into discussion about the protocol with the community.
Proposal 1 & 2 as presented by Fei team are untenable, because it promises up to 100% of PCV to redeem FEI at $1. Any redemption window we offer is a chance to raid more PCV, because as the price movements of ETH fluctuate, whales can short or long ETH against FEI to drain supply. All of those price swings in ETH open up more supply to be drained.
In fact, even if you force people to stake FEI in order to redeem $1, and you make the swap instantaneous for everyone based on some potentially exploitable oracle, you are betting the farm on the ETH market price movement. At any time, ETH can tank >21% and in that scenario, not only can we not redeem the 25% FEI outstanding, but we have dumped completely on TRIBE holders, who we now know are mostly retail preswappers:
<5 ETH | 80% preswap
5-50 ETH | 60% preswap
50-500 ETH | 33% preswap
500-5000 ETH | 18% preswap
\> 5000 ETH | 27% preswap
The problem is, that the team doesn’t even realize this. They seem to have very little understanding of game theory mechanics, and they have full control over a dangerous amount of ETH.
The team is not experienced in managing funds. 100% in ETH exposure for a fund that supposedly backs FEI + TRIBE is completely reckless. And the protocol is still broken. The project we invested in, as it stands, no longer exists. The whitepaper has been violated multiple times by the team. I get that they did this in good faith, but the process for submitting proposals and engaging with the community has been completely lacking.
The Team + VCs have 40% of the vote, or 200M supply of voting weight. So, the Guardian + 40% monopoly on voting supply, basically means that investors are completely at the whim of a16z, Coinbase, et al. and the Fei team.
The Howey test states (U.S. Securities Law), quite clearly, to determine what is a security and what is not:
- an investment of money
- in a common enterprise
- with the expectation of profit
- to be derived from the efforts of others
Parts 3 and 4 are particularly important as the other 2 are not debatable. In order for TRIBE to be legally defined as a security, it has to be determined that all 4 are true. Numbers 1-3 are quite easy to argue based on the arguments pitched to the public: free airdrop + TRIBE and an LP pool === profit. Meanwhile 2/3 Guardian multisig + 40% monopoly on voting supply despite fronting 2% of the capital at risk…makes a damn good argument that TRIBE is a security.
And that’s the best legal case definition I can make for TRIBE right now: it’s a security. There’s also a case that can be made that Fei Protocol is a ponzi scheme promising $1 to FEI holders with no risk, while PCV ratio fluctuates based on market movements…despite the fact that FEI was sold as an algo coin subject to a burn mechanic to TRIBE bagholders.
For that I present this definition:
" A fraudulent investment plan in which the investments of later investors are used to pay earlier investors, giving the appearance that the investments of the initial participants dramatically increase in value in a short amount of time." [2]
I’m not sure who came first or second with regards to FEI/TRIBE preswappers and I’m not here to debate that point, but the fact is that arbs, hodlers, bagholders, etc of both TRIBE and FEI are completely at the whim of a16z, Coinbase, et al + Fei team of 3 over $1B in capital.
I’m not a lawyer, I’m just a poor, uninformed retail investor who just stumbled upon Securities Law websites. But I want to call attention to that for the 200M in TRIBE voting supply out there on the market that I know these folks control [3].
But I can make a damn good argument, and I can tell you that this game of chicken that we are playing with the ETH price is beyond dumb and stupid, for everyone involved in this sale, everyone involved in the VC round, everyone involved in crypto. What I’m most concerned about, is that the adults in the room that are supposed to know better than me, the Andreesen-Horowitzes and the Coinbases of the world and anyone else attached to this project, did not immediately propose a Genesis refund after the rebase mechanic was proven to be exploitable. You are offering to give 75% of FEI holders an exit while offering nothing to TRIBE holders. I can make a pretty good case that is the definition of a ponzi, a fraud, and securities law, because it completely changes the terms of the whitepaper, it rewards some at the expense of others. It also makes promises it can’t necessarily keep: all based on the illusion that ETH price can’t retrace back to what it was 2 weeks ago. Madness!
This is what needs to be done: Redeem TRIBE + FEI at Genesis ETH price. Walk it back, carefully, and you avoid all the unlimited potential legal liabilities that I just mentioned there. You also avoid retail getting rekt at expense of whales and VCs. It’s the right thing to do. It avoids a $1B bearish headline and yet another securities law violation in crypto. Just as Coinbase has established so much credibility in the space, it can be gone overnight if they are attaching their name to protocols designed to delude people into thinking they get free money to the tune of $1B+.
Admit it: the team + investors have no idea how to run an algo coin. This should have never gotten this big. It only did because Coinbase + a16z stamp of approval was on there. Y’all should have known better. Fix this, and crypto market stays content and y’all still make billions on your other businesses who are exposed to this event. FIX IT.
[2] Ponzi Scheme legal definition of Ponzi Scheme
[3] Tribe DAO Docs | Tribe DAO Docs
