I think we should avoid rewarding 2nd layers of rewards (I mean, distributing rewards to something that gets value from our staking rewards in the first place). But if we do, please consider my CompoundingStaker
I have voted for “more discussion” on the TribalChief Rewards snapshot, which is also the final result of the Snapshot poll. Based on discussions in the forum and discord, the core team feels we are attempting too many changes at once.
The TribalChief is an important change in providing the Tribe the flexibility to adjust rewards and incentivize desirable behaviors, and we can ease into these changes as use cases and partnerships arise. We should aim to make some set of useful changes while maintaining similar structure to the current system.
We intend to propose a binary vote with the following characteristics:
Initially maintaining roughly equivalent rewards towards FEI and TRIBE holding
No change to the reward distribution schedule
Focusing on the most important integrations for incentives
Based on the current snapshot results show that FEI-TRIBE LP, FeiRari TRIBE, Aave, and Curve are the most desired incentives, which we agree with.
The following AP distribution would represent a positive shift for the protocol towards FEI utility while also maintaining a much closer relative amount of rewards to TRIBE holders:
1000 AP Uniswap FEI-TRIBE LP
1000 AP FeiRari TRIBE
750 AP Aave
750 AP Curve
Since FEI is not listed on Aave or Curve yet, these incentives would be added once we are on those platforms.
The net effect would be more heavily weighted rewards for TRIBE in the short term, and as FEI gets added to Curve and Aave the rewards would shift towards FEI while still being relatively balanced (57% FEI, 43% TRIBE). The benefit of this approach will be to signal to Aave and Curve exactly how many rewards we plan to add as an additional incentive for listing on top of any TVL commitments.
Additionally, the distribution rate (75 TRIBE/block linearly decreasing) should remain consistent with the current schedule.
Please share your feedback here, as the discussion will inform another snapshot on Thursday, Aug 12.
- 500 AP Uniswap FEI-TRIBE LP
- 1500 AP FeiRari TRIBE
- 750 AP Aave
- 750 AP Curve
I think all parties would prefer this. Many retail TRIBE holders voted for both Uniswap and FeiRari because those were the two options that had TRIBE in them. But between those two, I think they would favor FeiRari since it’s 100% TRIBE. At the same time, we all seem to agree that rewards on Uniswap isn’t very useful for the protocol, especially with the IDO already there.
Edit: The snapshot significantly favored Uniswap over FeiRari, so it seems unwise to move AP to favor FeiRari.
However, I still advocate for treating the current amount of rewards going to TRIBE holders as a hard restriction that we must honor.
In addition, I think the reward going to Uniswap should count as close to 100% towards TRIBE. That is because FEI must be paired with TRIBE in order to earn the reward, and TRIBE is the scarce asset while FEI does not appreciate above 1. Intuitively, suppose the government started giving a fixed amount of rewards pro rata to gold bars deposited at a government owned vault, with the provision that each gold bar must be paired with $1. This policy is going to increase the market price of gold bars, but not the price of a dollar because everyone can get a dollar at, well, $1. Now, suppose the government halves the reward, removes the restriction that gold bars must be paired with $1, and gives the remaining half of the reward to people who deposit one dollar bills. This has a negative impact on gold bar holders because they will not get the other half of the rewards by moving their $1 to the new staking program. The APY on the dollar will be extremely low, as many other people will use their dollars to stake as well. Moreover, the gold bar holders do not benefit from this increased demand for dollars, since the dollar does not appreciate. (TRIBE holders do benefit when there is increased demand for FEI, but that is distributed among all TRIBE holders, whereas only the stakers bear the cost of reducing staking reward).
As a result, I think we should keep the current rewards reserved for single-sided TRIBE staking (including Uniswap), and use Treasury for additional rewards that bootstrap FEI usage.
How increased supply of TRIBE on FeiRari would help the protocol? Can we estimate the impact on TRIBE APY there? It would be attractive to supply TRIBE there? I don’t imagine TRIBE borrowing will be big.
I think there should be a large demand for borrowing TRIBE as long as we reward TRIBE holders with more TRIBE. As long as the protocol’s value stays the same, TRIBE price will decrease over time, as it has for a few months now. In fact, as long as PCV largely consists of ETH, depositing ETH in FeiRari and borrowing TRIBE can be a good short play with low risk.
Alternatively, people can just loop TRIBE on FeiRari. This by itself isn’t particularly useful for the protocol, of course. But the TRIBE reward can incentivize FEI borrowing as was mentioned in other places, and I believe it’s one of the efficient ways to honor retail TRIBE holders’ expectations.
If we are going purely by the expectations pre-launch, it’s also relevant that right now the staking rewards are 200% of what was suggested in the original launch plan, so the staking parameter updates we are discussing don’t violate the Genesis expectations that you’re talking about, because they’re still well above the originally planned levels.
Plans can adapt as conditions evolve. I’m not trying to suggest any specific plan, just to point out that TRIBE holders can always change the plan if a better plan is found.
Many other protocols (aave, curve, yearn, …) use their rewards to incentivize different behaviors that benefit their ecosystems. Their gov token holders vote for this to happen, even if this causes some form of dilution, because they expect that these incentivized behaviors will develop their ecosystem like watering a plant. Incentivized behaviors have been a major factor in allowing these protocols becoming the dominant players in defi.
The $90 million dollar question here is, what is the best way to distribute the remaining $90m in staking rewards? It might be the current system, it might not be. The TRIBE will decide!
You’re right, the doubling of staking reward was a transfer from non-retail to retail investors that happened because of the circumstances back then. So retail may be more open to relinquishing some of it back to them, but I would still consider that a sacrifice for the good of the protocol.
I absolutely agree that we should start incentivizing beneficial behavior, and TRIBE-FEI liquidity is certainly not a priority given the IDO. But my question is, why should only one group of stakeholders pay for the incentives? If we want the incentives, everyone should equally dilute their shares, not just Genesis investors.
The decision between using Treasury vs. diverting existing staking rewards is simply one of who should pay for the incentives. Retail can of course make the selfless decision to pay for it themselves, but I don’t think that should be expected of them, just as we don’t expect VCs to give up their non-vested TRIBE. We can ask them to be selfless, but we should be clear about what we are asking them to give to the protocol.
Sounds good to me. This should also drive borrowing of TRIBE, with more liquidity added there. If there is 40% TRIBE APR on FeiRari TRIBE, we can expect borrowing costs to go >40%.
A person depositing TRIBE in the pool will earn 40% from staking rewards + ~20-30% from interest paid by borrowers. Someone staking now can sell their FEI for full TRIBE, and earn 60-70% APR on it, and not be impacted by IL, and be able to leverage (
to swap borrowed FEI for TRIBE & loop deposit, earning up to 150% APR TRIBE on TRIBE… sounds like a strategy for fei-tools shhh). Pretty cool for holders. We’ll be able to comfortably borrow FEI while earning more TRIBE, like a negative interest loan. The last thing missing would be fTRIBE-8 delegating back the voting power to the depositors
I’d even remove the FEI-TRIBE LP incentives. But let’s not do too many changes at once, as Joey said.
This is an interesting perspective. We could keep the initial plan of 100M TRIBE during 2 years to Uniswap and reallocate the other additional 100M TRIBE to incentivize valuable behaviors.
Seems too much for me the 1000 AP FeiRari TRIBE. I consider that Fei lending on Aave brings more value to the protocol than incentivizing TRIBE supply on FeiRari. An additional question, why not incentivizing Fei supply in FeiRari?
I would like to add that the current emissions rate for uniswap LP is already significantly higher than what was outlined by the whitepaper. Increasing the emissions rate any further would cause further disruptions to the tokenomics of TRIBE.
I firmly believe that the new incentives should be taken out of the existing incentives allocation for Uniswap LP. The uniswap v2 LP of TRIBE-FEI is easily the least efficiently used pool of capital in all of Defi currently, by luring holders into other pools such as AAVE or FeiRari, the dormant capital in uniswap v2 can be channeled into use-cases that benefits the protocol more effectively. As things stand many larger holders feel like they are shoehorned into this inflation standoff by the uniswap V2 pool; either stay in or get left behind by the inflation race.
Another incentive to pre-emptively thin out the uni V2 pool, would be to allow better price discovery, as currently ~$10M can barely move the needle in that pool. It would also prepare for an eventual migration to Uni V3, as to further increase the capital efficiency.
I agree with Cozeno on this. We need to move unproductive capital to more productive use cases such as AAVE, FeiRari and Curve.
There is no sense in which Uniswap reward is unproductive because there is no cost to the protocol. No outside entity is being paid, and it’s simply a transfer of shares from the protocol to retail investors, which also happens to incentivize liquidity provision. If the current staking rewards are wasteful, then so is the TRIBE vesting to the team and the VCs. If you believe (as I do) that we should keep vesting TRIBE to the team and the VCs because they provide (or have provided) value to the protocol, then the same should hold for Genesis pre-swappers and secondary market investors.
There are two components to the proposal:
- Incentivize behaviors that benefit the protocol.
- Have pre-swappers pay for the incentives.
I am trying to point out that 2) is unfair, but everyone keeps telling me that 1) is really important.
What ive outlined does not contradict what you are saying. I am not against the current GLOBAL emission rate of staking rewards, I am only against still pumping them to UNI v2. Redirecting those rewards does not change the dynamic of incentivizing beneficial behaviors to the protocol.
increasing depth in the lending platforms would induce loan origination denominated in FEI, which creates lasting demands for the stablecoin.
Pre swappers could still receive the same level of incentives if they remove their FEI-TRIBE LP and put their TRIBE on FeiRari to receive incentives, and their FEI on AAVE or Curve for example.
I believe @cozeno is making the below argument as well.
I don’t think this is true because FEI is not a scarce asset like TRIBE. In my post above I used the example of gold bars, but to be more extreme, suppose I own an NFT, and this NFT can be paired with 1 FEI to receive a staking reward of $100. Only I own the NFT, so I get the full $100 reward. Now, suppose the reward scheme changes so that staking my NFT alone gives $50, and the remaining $50 goes to FEI stakers. I can still stake FEI, of course, but everyone else can also buy FEI at $1.01 and stake. So my reward from staking FEI will definitely be lower than $50. As a result, I am worse off.
This wouldn’t happen if people staking FEI had to buy it from me, just as they would have to buy TRIBE from me if they wanted to stake TRIBE. But FEI can be minted by anyone.
The current Uniswap reward is close to 100% reward for TRIBE holders because FEI, which can be minted by anyone, must be paired with TRIBE to be eligible for the reward. As a result, any change that keeps the total emission the same but introduces a significant amount of FEI-side rewards is a reduction in the reward going to TRIBE holders. I am not saying such a proposal should never pass, but we should explain to the voters that the proposal would reduce their rewards.
I think the correct way to compare the rewards for TRIBE holders is to use the stablecoin interest rate for FEI.
Let’s ignore divergence loss (IL) and swap fees for now. Currently, 80M TRIBE is being staked with 64M FEI to receive 140M TRIBE in the next 1.7 years. Assuming PCV net worth stays at 530M, the dollar value of 220M TRIBE is
530M * 220/700 = 166.6M $.
So the total dollar value that the stakers have after 1.7 years is
166.6M + 64M = 230.6M.
Now, suppose we remove Uniswap and allocate the reward equally between single-staking and FEI. The TRIBE side would give 70M TRIBE after 1.7 years, so the holders would have 80M + 70M = 150M TRIBE, which will be worth
530M * 150/700 = 113.6M $.
So to break even, the holders need to have 230.6M - 113.6M = 117M FEI after 1.7 years. Since they start with 64M FEI, this requires an APY of
As long as stablecoin yield stays under 42%, TRIBE holders will be worse off.
I see where you are coming from, maybe having a low APY for regular FEI and then boosting APY when the FEI is locked?
I think vote boosting and locking should be a separate consideration.
In general the main stakeholder that stands to lose here is the FEI-TRIBE LP stakers. Plain TRIBE holders benefit as they get a single-sided staking opportunity. FEI holders benefit from additional yield opportunities. The protocol benefits from more flexibility for future rewards adjustments.
All the while the amount of rewards distributed towards holding FEI and holding TRIBE respectively remain nearly identical and not changing the distribution schedule.
I’m of the opinion that the proposal as-is will be about as good as it gets in terms of benefiting the largest number of stakeholders with acceptable compromises.
As an aside, I’d be open to increasing the TRIBE borrow costs on Fuse, adding fTRIBE to snapshot voting, and delegating the TRIBE in Fuse to somewhere useful
What does this mean?
About the allocation, why not?
- 1000 AP Uniswap FEI-TRIBE LP
- 1000 AP Aave
- 750 (or I would prefer 500) AP FeiRari TRIBE
- 750 (or I would prefer 500) AP Curve
I think liquidity on Aave is key for Fei protocol.
It means the TRIBE in FeiRari can be delegated and used to vote on-chain, perhaps based on the snapshot results of FeiRari TRIBE holders voting as a block.
After diving deeper on the technical constraints of Aave incentives I’ve made a separate forum post to help reduce the complexity on this proposal: Aave Borrowing Incentives
The Aave incentives can be discussed and voted on as a separate issue
This proposal would now become:
- 1000 AP Uniswap FEI-TRIBE LP
- 1000 AP FeiRari TRIBE
- 1000 AP Curve
A note about the curve incentives is that we will likely need to change them from the raw FEI-3CRV LP tokens to their Curve native staking once we get a CRV gauge allocated to FEI, but we shouldn’t let that block the initial distribution of rewards.
In my opinion, this proposal will be worse to small holders that cannot afford the gas costs of managing multiple positions.
It is also about managing expectations. When they made a decision few months ago to provide liquidity to Uniswap and incurred in gas costs, they were expecting to earn the rewards for a longer period of time.
I think predictability is something valuable, so I would prefer not a radical change. That`s why I suggest to have half of the remaining TRIBE rewards to Uniswap FEI-TRIBE LP and the other half allocated to the other places. This would be also aligned with the results from the last snapshot.