Reposting as a separate thread.
Introduce a TRIBE buyback pilot program by establishing a bonding curve that buys TRIBE with FEI.
This proposal would be a pilot for the FEI V2 design and introduces a TRIBE buyback program. A percentage of PCV equity (PCV - user circulating FEI) is used to purchase TRIBE from the market. This is a profitable arbitrage for the protocol, aids price discovery of TRIBE, and makes a direct connection between FEI and TRIBE.
A buyback signals the community’s confidence in FEI protocol, and a positive price action could raise FEI awareness in the DeFi community and bring in new investors. In the end, the best marketing is price action. More awareness about TRIBE could increase the use of FEI.
A buyback program brings value to TRIBE holders who believed and invested in the protocol. They take the risk to backstop FEI, if needed. It contributes to tightening the relationship between FEI and TRIBE, which is essential for the long-term sustainability of the project.
TRIBE has been grossly undervalued relative to the value of PCV. PCV is worth around $850M, while user circulating FEI is around 280M. Even if we were to wait until all 700M TRIBE is issued, redeem 280M FEI at $1 each, and then divide the PCV pro-rata among TRIBE holders, each TRIBE would be worth more than 80 cents. This is of course only a lower bound on valuation, since it does not consider the fact that 1 TRIBE today is worth more than 1 TRIBE tomorrow due to staking rewards. Nor does it take into account the growth potential of FEI protocol.
On the other hand, TRIBE has consistently traded around 65 cents in the recent bull market.
A buyback program would also contribute to price discovery and help the price of TRIBE to be closer to its intrinsic value.
As this is a pilot program, and considering the collateralization ratio of the protocol, we suggest a buyback of 2% of PCV equity calculated from Q2 (April, May and June).
Set up a bonding curve with the following parameters.
Asset sold to the bonding curve: TRIBE
Asset issued by the bonding curve: FEI