As Tribe was listed on Coinbase, Binance, and a lot of CEXs, It should be a good opportunity for Tribe to pump and make a good performance. But the liquidity in uniswap is too deep, it makes a change for arbitrage from uniswap to other CEXs.
The FEI-Tribe LP is compose with 70%(~$235m) from team and 25%(~$82m) from Tribalchief staking atm. See below:
The liquidity of Fei-ETH pool is deep enough for Fei, but maybe Tribe holder manna volatility of tribe, deep liquidity is different to pump or dump Tribe price. Without team’s LP, there is still about 900m liquidity in uniswap, That’s enough for Tribe.
I think we should remove team’s LP from uniswap pool, almost 70% in the pool. It will pump tribe tribe price higher when buyback. We can deposite the Fei and Tribe from LP into curve or rari pool.
Overall this is a nuanced decision as it involves many stakeholders and unknowns. Removing this liquidity would amplify TRIBE volatility. This means that downward moves would be exacerbated as well as upward moves.
On the mechanism side, Fei V2 will have:
Continued TribalChief liquidity mining (downward pressure)
Programmatic buybacks (upward pressure)
Tribe backstop inflation (downward pressure)
Particularly on the last point, it would be dangerous to remove liquidity which could otherwise stop runaway inflation.
Firstly, this liquidity is owned by a variety of stakeholders in Fei Labs. So coordinating their approval would only be worth it if the proposal has clear benefit and strong broad community support.
With respect to the material of the proposal, Fei Labs core team wants what is best for the protocol and TRIBE holders, and it isn’t immediately clear to us whether this is a good or bad decision from that perspective.
Judging from Joey’s comments regarding various stakeholders and Garfield’s from (too) deep liquidity, I would offer to suggest the following:
Remove TRIBE rewards from FEI-TRIBE LP and incentivize TRIBE-ETH instead.
This would remove a lot of individual user liquidity from FEI-TRIBE and move it into ETH instead. Besides, the FEI-TRIBE pool is limited in functionality compared to others and liquidity would be more efficient. This will also cause TRIBE prices to be more correlated with ETH and allow more upside (conversely also more downside).
Perhaps @joey can confirm, but iirc the IDO LP tokens are behind a 4-year timelock, so Fei Labs can’t unpair their LP tokens to FEI and TRIBE ?
The only other option would be to redirect staking rewards entirely, as suggested by @arcology, but during TribalChief migration, this was suggested by the team & was unpopular. Maybe with fTRIBE-8 incentivized next week, it would now be ok to remove rewards from FEI-TRIBE Uni-v2 LP tokens to free more AP for other pools ?
I think the unpopularity of the redirecting of rewards was based on a combination of system shock and that there was no alternative (at the time) for splitting FEI and TRIBE rewards. Also the IDO pool is considered functional (even if timelocked) so IL coupled with TRIBE sell pressure actually causes TRIBE to be further centralized into this pool. This phenomenon is a major criticism of this project.
However, since the new staking contract required people to unstake anyway, having a different set of incentivized liquidity pairs with the start of TribalChief seems like a missed opportunity (bonus for the gas rebate).
Now that such an option exists and that the Curve pool is disproportionally rewarded, I would suggest shifting over the AP allocation to Gelato pools, Sushiswap (this would be a great integration for 2x rewards) and perhaps micro AP allocations to bootstrap liquidity on new integrations. I also strongly believe incentivized TRIBE-ETH would be the best way forward.
I also support incentivizing TRIBE-ETH and moving rewards to other pools mentioned above. Everyone is taking about how with volatility, the downside would be greater, yes, but also the upside and this will bring more users for the protocol and thus in the long run may be enough buy orders to dampen the volatility. Give us the volatility.
Yes, this function is writable only by the DAO, so TRIBE holders can vote to unlock the liquidity. This was included in case the community wanted to move liquidity to a different AMM (UniV3 for example).
I think TRIBE-ETH liquidity is an interesting idea and would support, although I don’t think it really does too much for the protocol. Buybacks are denominated in FEI, so having FEI liquidity is best from an arbitrage perspective.
Lets see how the single sided TRIBE rewards affect TRIBE distribution + velocity before making any changes to liquidity.
This is an idea that keeps coming up in community calls, discord channels, and elsewhere. This proposal will put the idea up for a snapshot vote. Moving this idea to last call, please respond if there are any aspects of this proposal that you think should be modified.
FIP-46: Remove FEI-TRIBE IDO Liquidity From Uniswap
Remove the FEI-TRIBE IDO Liquidity from Uniswap. The FEI and TRIBE will be moved to a cold wallet with the 4 year vesting schedule unchanged.
TRIBE’s liquidity depth on DEX’s is high in comparison to similar market cap tokens. The FEI-TRIBE pool is the 2nd largest pool on Uniswap, with $363M TVL at time of writing. This is a deeper level of liquidity than any other governance token, and the situation only becomes more extreme if you compare each governance token’s liquidity to its fully diluted value.
Having deep liquidity presents many benefits, including facilitating large orders with low slippage, and also stabilizing the price against volatility. However it can also be a double-edged sword. A large amount of liquidity relative to the size of the market can dampen price action and prevent natural price discovery. Since most of this liquidity is from the Fei IDO, there is an argument to be made that it is not organic liquidity, and should be adjusted since it was a parameter in the protocol decided before the protocol launched.
Remove the FEI-TRIBE IDO Liquidity from Uniswap. The FEI and TRIBE will be moved to a timelocked cold wallet with the 4 year vesting schedule unchanged.
Voting will last 2 days and have a quorum of 10M TRIBE.