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 itās 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:
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 donāt 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 wouldnāt 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.
Letās 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.
Iām 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, Iād 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?
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 Iāve made a separate forum post to help reduce the complexity on this proposal: FIP-22 Aave Borrowing Incentives
The Aave incentives can be discussed and voted on as a separate issue
This proposal would now become:
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 shouldnāt 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.
A new version of this proposal is up on snapshot, revised based on the feedback here and discord
https://snapshot.fei.money/#/fei.eth/proposal/Qmc5tJ9Hg1V8mnNB56AptxHAnpmHX1KefJ1Uw9TcSgfoKF
Just to clarify, if this proposal passes, the same total amount of rewards will being distributed, but now across multiple defi platforms. 50% of rewards are for TRIBE holding, 50% are for FEI holding, just like they are now. Current stakers should be able to get comparable yields as before by migrating their TRIBE+FEI as needed.
The motivation is to incentivize behaviors that better benefit the protocol. Having a $300m TRIBE-FEI pool isnt as healthy has having a $100m tribe-fei pool and other TRIBE and FEI being put to work on other platforms
I donāt think this will be the case because the yield on FEI will be diluted.
Another option that just crossed my mind is to divert rewards to FEI usage, but at the same time allow TRIBE holders to stake TRIBE to boost their individual yield on FEI - sort of like how Curve works. This incentivizes FEI usage but the reward goes to TRIBE holders. In that sense itās similar to the current Uniswap rewards, but we will be able to incentivize behaviors that benefit the protocol. This allows us to maintain the rewards vesting to the TRIBE holders and at the same time reward the behaviors that we want to reward, while not issuing new TRIBE from the treasury.
I am not very clear what holders of LP tokens who are staking in UNISWAP should do? If LP tokens need to be moved from one pool to another, I see an additional expense due to the transaction fees
Yes, indeed. There will be 2 transaction fees for withdrawing the LP tokens and restaking them, if you want to keep earning rewards.
Would it be possible to have a migrate button on the UI that does unstake & restake in a single transaction?
So those of us who participated in the genesis and pre-swapped are paying additional transaction fees to re-stake. Somewhat unfair to pre-swappers
I support the long term thinking here though as a passive staker, I am sad to see
If the vote passes, existing FEI-TRIBE LP stakers will need to start migrating funds at 12pm PT / 7pm UTC on Sunday Sept 5 to continue earning TRIBE rewards
Itās quite annoying that I have to make at least two txs to migrate and bear the gas cost myself.
Ideally, an incentive/reimbursement solution should be proposed alongside to make this upgrade smoothly for existing backers/stakers.