Really appreciate the thoughtfulness of your reply. Thank you very much.
April 10 |
- | - |
It’s hard to tell. What I’m about to say is a simple analysis of what would happen in one extreme scenario. There’s a lot I can’t take into account because it’s a very complicated system, given all the psychological forces that affect it.
So here’s the question I’ll try to answer: what will the price of tribe be if all of the circulating FEI is bought by the protocol at $0.9 or $1 and the price of tribe reaches the floor that protects us against 51% attack?
Note, before anything, that this floor is only theoretical at the moment because most of the Tribe is timelocked or in possession of the DAO. This explains why the price of tribe has often been below this price floor in the past week.
Ok. At the moment I estimate there are 813M - 290M = 523M circulating FEI. This number could grow as people speculate that they’ll be able to sell at $0.9 or $1, creating an incentive to buy FEI from uniswap. But let’s assume for simplicity it’s 523M.
If FEI is bought at $1: then the remaining PCV will be 1024 - 523 = 501 M. In this case the market cap of tribe would have to be at least 1002 M to be protected against a 51% attack. This would value each tribe at about a $1. That said, though $1 would be near the market price, it’s redeemable value if we, as a community choose to abandon the project as the FEI holders want to abandon at the moment would be around $501M/138M = $3.63. Of course, no individual will be able to choose to sell at that price, but the community might choose to vote to do so all together. I don’t think that’s a desirable outcome, but it’s an important one to consider when we consider how much we lose if we adopt this proposal. In one sense, the tribe of price might drop to around 66% of its current value. On the other hand, it’s redeemable value if we choose to abandon the project is around $3.63. That means we could all still profit upwards of 25% on our genesis investment and also return seed investments.
If FEI is bought at $1: then the remaining PCV will be 1024 - 523 = 553 M. In this case the market cap of tribe would have to be at least 1106 M to be protected against a 51% attack. This would value each tribe at about $1.106. It’s redeemable value if we choose to abandon the project is around $4.00. Again, I think that would be extremely undesirable outcome. But it paints a clear picture of the situation we’d be in.
What all this is to say is that, despite all of the scaremongering we’ve witnessed over the last week, the Fei Protocol remains in a rather strong position. We can indeed afford to pay out every single FEI holder. Whether we should is another matter. I think we shouldn’t because it won’t solve the problem that we’re all most concerned about: the incessant attacks against the team and the project. My take is that those attacks are more so based on people’s inability to accept their responsibility and competitor’s fears that Fei Protocol will be tremendously successful. Needless to say, the picture I paint above shows that neither of those concerns will disappear after passing options 1 or 2. After all, those that leave might eventually realize they made a mistake and lost money relative to staying with us. And our competitors will do the very same computation I just did and realize that the Fei Protocol remains in an extremely strong and promising position.
Ask Bitcoin, Ethereum, or Avalanche: the path of disruptive technologies is riddled with catastrophic mistakes from its users and resistance from the legacy infrastructure it threatens.