If we are able to make this vote, it wouldn’t take much time for FEI to get back to peg as we get rid of most of the unwanted sell pressure from Genesis participants who want out. Less sell pressure = easier to get to peg. At the same time speculators who bought will be subject to burn penalties once protocol is turned back on. So even less selling pressure = easier to get to peg.
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We are unlocking collateral by agreeing for redemptions. We’re just adding a precondition to it so genuine Genesis participants who want out get to redeem instead of free loaders. That’s efficient allocation of collateral. That’s what TRIBE holders are responsible for. That and getting to peg. This proposal might make us achieve both.
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@joey can you take a look at this? This looks like a fairer mechanic that balances TRIBE vs FEI trade-offs.
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@siddharth could you tweak title to underscore the burn aspect? Maybe call it the Undo Button Proposal as an easy description to grasp?
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Nope, people will wait until the reweight come back and sell at 1. No sell presssure reduced.
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Burn penalties also reduce the buying pressure. Why would I buy a stablecoin I might not be able to sell? It’s not supposed to be a speculative asset. That’s TRIBE.
The reweight is not going to come back as it was. It has to be reworked.
It’s a floating peg algo coin, it’s fundamentally different than DAI. MakerDAO never airdropped DAI. It was pretty volatile for the first couple years. And even DAI floats off peg dramatically from time to time or during market crashes.
Burn penalties will infact reduce selling pressure while direct incentives will increase buying rewards which will help us get closer to peg. Which is what the protocol is all about.
Yes but this time there will be burn penalties and buying rewards as the vote is after the audit. Which means after redemption protocol will be up and running like it was intended to.
That was the theory. It didn’t work. That’s why we’re in this mess.
I totally agree and support this.
Agree and support this.
For clarification, the tribe to be burnt should be in the same proportion as given in the airdrop. Anyone who’s 100% fei can buy some tribe to burn, if they want to exit at the redeemable $value.
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This is fascinating. I definitely had not thought about it this way. I would like to understand the engineering constraints.
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Yes agreed. Didn’t work because of a vulnerability and enormous sell pressure. The vulnerability will be patched and audited before the vote. The proposal aims at relieving excess sell pressure. Takes care of both issues.
These people who came for the free airdrop should return it. They inflated the tribe price at IDO for a freebie and then want out at $1. If they don’t have enough tribe then they can buy some on the market.
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This is a fair proposal but I worry that it won’t work.
The ultimate goal of the original proposal is to restore the peg to 1 and bring back market’s confidence in the project and restart. However, asking FEI holders to burn TRIBE is equivalent to reduce the redemption price to 1 - TRIBE price * airdrop ratio. A rational FEI holder will meticulously calculate what he could eventually get and compare it to current price and will refuse to redeem if the former is lower. As such, selling pressure won’t be relieved much, and FEI will still hang over around 0.8x. However, in order for the project to succeed (and for TRIBE to worth something), sooner or later, the peg must be stored. They will sell the FEI when the peg is restored.
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Then people who think that way can choose option 3 which says no action. That way we could let the protocol do what it was intended to do after the patch is applied and audited. FEI slowly returns to peg supported by burn penalties and buy rewards. Tribe holders won’t be hurt too.
totally agree with sth.
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