TIP-110: Simplify PCV

FIP-XX: Simplify PCV

Author(s): The Tribal Council


Simplify and de-risk the PCV by selling all agEUR, ANGLE, CVX, CRV, TOKE, AAVE, COMP, and LQTY. Use the proceeds to purchase DAI, then deposit into the PSM.


Due to ETH’s recent downward price movement, the PCV has lost over a hundred million dollars of equity since ATH, putting extreme pressure on FEI’s collateralization, with currently only 42% of user-owned FEI being backed by stablecoins. In order to avoid having to sell ETH to back FEI, we should sell various governance tokens that do not provide a high utility to the PCV in exchange for stablecoins to back FEI’s direct redeemability. This action also reduces smart contract risk as PCVDeposits can be consolidated into less assets, and less interaction with external smart contracts is necessary.


Sell all LQTY via an LBP

Redeem all agEUR

Sell all CRV, CVX, TOKE, AAVE, ANGLE and COMP on market

Sell all locked tokens (veANGLE, vlCVX, veCRV) upon unlock

Use the proceeds from the above sales to purchase DAI, then deposit this DAI into the DAI-FEI PSM.


Hi :wave: the Tribe,

Guillaume speaking for @AngleProtocol, agEUR is a stablecoin (€) and not a governance token.

Moreover Fei Protocol is earning interest on owned tokens via both our governance token ($ANGLE) and by locking them to receive earned fees and interest (in USDC) from Angle protocol.

Currently the Tribe is earning a 5% APR by holding its agEUR.

We have also planed with Fei core team to move Fei owned by Angle to the Fei saving rate strategy when it is live.

I think it has been a fruitful cooperation between our protocols and I am in favour to keep it that way. :slight_smile:


On top of that, there are also some ANGLE incentives for people participating with FEI in the Angle protocol.

People with FEI/EUR perps (you can long FEI and short EUR) are getting ANGLE rewards, just like people participating in Angle-related strategies for FEI (so far involving lending to Aave and automatically compounding Aave rewards into new FEI).

Thanks for sharing your point here Fishy! Your intention does make sense. number one priority is to maintain the backing of FEI with proper distribution of the PCV. I am glad AngleProtocol did chime in regarding the incentives they are producing for the PCV.

We probably need a breakdown on the incentive and rewards different assets in our treasury is actually making ( revenue ) for PCV giving us wiggle room to swap out for stables in the future ( via market or OTC to avoid price fall )

I recommend someone create a list of these and then we can better understand strategically which assets to let go vs not let go as a result

I think overall this is a great proposal, we should be aiming to simplify PCV assets right now. A few thoughts on some specific assets.

I’m in support of holding agEUR if Angle elects to use the Fei Savings Rate instead of AAVE. I would love to continue to support Angle especially if they help with the current Fei contractionary policy.

I think we should explore selling CVX OTC to Frax if we are going to be aligning more closely with them. This could be another big win-win.

I’m opposed to selling LQTY as we own a significant amount, have strong synergies with LUSD, and the assets provide stable cashflows in hard assets. Staking LQTY to farm LUSD and ETH, two of the assets we are most reliant on with the exception of DAI, aligns very strongly with the needs and values of the Tribe. Additionally, this is also going to be the most difficult asset to sell and have the most slippage as we hold a significant amount, >1% of FDV, and there is limited liquidity.


I would be in favor of selling these assets only.

I would suggest that a veto snapshot be held to allow selection of stable vs volatile assets if not on an asset-by-asset basis.

The veto will be structured per-asset.

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updated the proposal to include sale of locked tokens, as well as ANGLE

Wondering if the sale of all assets at a possible local bottom is prudent - if the proposal passes I hope more detail can go into whether a portion can be sold first to ensure FEI’s backing temporarily and assessing the situation as time passes.

Speaking for Angle, we’re currently finalizing a generic ERC4626 strategy so I think we’ll definitely be able to use the Fei Savings Rate instead of AAVE

Chiming in from the Liquity side, since we’ve been long time collaborators at this point:

Happy to see more thought go into the assets behind the PCV. But with regards to LQTY, I generally agree with @JackLongarzo. LQTY presents an opportunity to keep both protocols aligned long term, while also producing more LUSD and ETH for the protocol, especially as borrow demand begins to pick up again:

As the market turns around, FEI’s PCV would miss any and all upside associated with holding LQTY. Which seems counterintuitive considering that the LQTY position is small as a % of PCV, but is large in terms of LQTY’s FDV.

Additionally, this is also going to be the most difficult asset to sell and have the most slippage as we hold a significant amount, >1% of FDV, and there is limited liquidity.

Not to mention that this could be a concern given that both of our communities are value aligned re: decentralization, have collaborated in the past, and have pending collaborations on other cool ideas that aren’t live yet. It feels a weird precedent to be so intertwined while simultaneously exiting in significant size against the community you’re intertwined with.

Though all-in-all I totally respect whatever decision has to be made for the health of FEI. And regardless of outcome, would like discuss how to proceed so that we set up a win-win scenario for the Tribe and Liquity communities.

Well, as a LQTY holder, it might not be a bad thing for Tribe DAO dump their LQTY token.

No offensive, but tribe council did’t show integrity in the recent RARI hacker event, after scanning their Discord, and read some twitters. It seems the core team did’t act aligned with the governance Vote for the recent reimbursement vote, which is a dangerous signal for a DAO. Trust and integrity is the most critical importance factors in crypto space, IDK how could a stable coin project going forward without this merits.

Would be in favor of moving forward with separate actions for each asset in Tribal Council, ie:

TIP-110a: Sell LQTY
TIP-110b: Redeem agEUR

To facilitate per-asset veto being possible as you mentioned.

I’m seeing that this is gaining attention (both in forum, discord, and twitter), so I wanted to comment a few facts about the current holdings of the DAO :

Some of these assets are not showing on the analytics page, because they have not been moved to a smart contract where they can be used & reported to the Collateralization Oracle (they have been farmed by depositing in various protocols, but the yield farming never was moved to a dedicated smart contract, because these would require specific dev efforts).

I think this is important in the decision to sell or not sell each asset, as the relative size of each of those speaks to what the benefit/effort ratio would look like to keep them.

Yes, if we want to be able to veto (escalate to DAO) each of these topics individually, these have to be separate TC actions.


I will ensure that these are separate TC actions then. Thank you so much for the detailed stats!

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I would like to see a snapshot vote for each asset as there doesn’t seem to be a consensus about each individual asset. I propose we proceed with an approval style snapshot vote to identify which assets the community does and doesn’t want to sell and then move forward with the Tribal Council executing each sale.


The TRIBE doesn’t have 6 weeks to try to decide what assets it want’s to liquidate. They’re literally all going down. We need to act NOW.

Posted this snapshot as recommended by @JackLongarzo

Strongly against selling agEUR as they intend to move to using the Fei Savings Rate. Dumping agEUR does not benefit us and only weakens our balance sheet.

I am also against selling LQTY for the reasons I have mentioned above. LUSD is likely the most decentralized stable asset on the market. The stability pool may also be one of the best yield farming opportunities in a bear market. We should be looking to increase FEI’s stable backing by acquiring LUSD as well as DAI. I’d much rather have the tribal council stake the DAO’s LQTY than sell it.

agEUR is fairly stable vs Fei Protocol’s liabilities (user owned FEI) so I don’t think it’s urgent to dispose of this asset. agEUR can be exchanged for FEI/DAI if and when other reserve assets get closer to depletion.

LUSD is a good stablecoin, but I have serious doubts about the value of LQTY considering their firm no governance stance; imo this is preventing the protocol from making forward progress and maintaining competitiveness. Demand for LUSD is propped up by stability pool incentives, which flows through to borrowing activity and LQTY fee earnings. As LQTY incentives trail off over time I expect LUSD market cap and LQTY fees to continue declining. I don’t see a future for this token unless Liquity team abandons the “not a governance token” meme/regulatory fig leaf.

CRV, CVX, ANGLE, and TOKE seem like non-core assets, and considering FEI is prioritizing redeemability with PSM I don’t think owning these assets to support FEI market liquidity is really that important. Support selling.

For COMP and AAVE on the other hand, I think it could be worthwhile to continue holding these assets. On a fundamentals basis, these lending protocols have strong balance sheets and cash flows and I think they’ll be long term winners during the bear market. Maintaining governance influence in these protocols will also help FEI scale up the most important business opportunity for the protocol - lending. The amounts involved are also fairly insignificant vs protocol liabilities, so I’d support holding these assets for the long term.