Tribe working group: PCV management

[pavel]

Hey fellow Triberians!

I hereby propose to create a Tribe working group for PCV management. It was created by @pavel. If you wanna join, please ping me.

What is the core problem(s) you want to solve? Define it.

At the moment PCV = $1.1B. Nothing has even started yet, and if FEI project succeeds, within several years Tribe PCV will become one of the largest investment vehicles in the world. DeFi TVL went from $1B to $52B in less than a year. During the same year market cap of Tether went from $6B to $44B, USDC’s MC — from $700M to $10B and total crypto MC — from $190B to $2T.

Just to put things into perspective: a16z has $16.6B assets under management, including $865M in crypto fund, the largest hedge fund in the world Bridgewater Associates — $140B, and world’s biggest sovereign wealth fund of Norway — $1.3T

Clearly, Tribe PCV is no joke and a policy to invest only in ETH, or some random number of assets is in fact a surrogate in the absence of policy. PCV is the size of a hedge fund and is essentially akin to Foreign exchange reserves of a Central Bank. If FEI is meant to be the Central Bank for DeFi, this portfolio should be structured and managed accordingly in the interest of long-term sustainability.

What impact will this project have?

In keeping with PCV’s presumed purposes:

• while maintaining peg to be able to withstand any shocks and mitigate risks including, but not limited to those of market, macro (cyclical), regulatory, technological nature;
• driving Fei integration with a broader panel of DeFi protocols;
• funding Fei R&D, grants and other causes deemed necessary by the Tribe community;
• possibly, stimulating market interest towards Tribe token/rewarding Tribe holders— subject to further discussion

Tribe will acquire a working sustainable investment vehicle implementing a framework for responsible (eventually) algorithmic management of the PCV with the investment objective of the highest possible return at an acceptable level of risk, which reflects long-term considerations, thus ensuring that the PCV benefits both current and future FEI well-being.

What does this group aim to accomplish (goals)

At the initial stage in cooperation with the team a set of foundational documents will be created, including:

• A whitepaper outlining PCV management working group mandate: management assignment, management objective, general management principles, duty to advise and right to be consulted, external cooperation;
  investment policy including: benchmark indices, risk limits, procedures for establishing risk limits, valuation and return measurement, measurement and management of market, (crypto) cyclical, regulatory, technological risks, instrument approval and investment due diligence review procedures, Tribe reporting principles.
• A bluepaper outlining implementation of the whitepaper in math models and algorithms.

At further stages the group will cooperate with the team and outside partners (including Balancer V2 & Uniswap) in implementing the above mentioned bluepaper in code.

How will this task be accomplished (methodology)

By working full-time using tools for group work like JetBrains Space: The Intelligent Code Collaboration Platform

What is the timeline for accomplishing this task?

It will be a permanent group with the first draft of the whitepaper coming in weeks and a bluepaper in a month. Then we’ll start writing code, suggesting PCV structure to the Tribe with the eventual goal of building fully algorithmic autonomous PCV management machine.

Working Group Leader(s) Who manages the group?

I’m @pavel the leader, you all could have seen my posts on this issue in the previous weeks:

A discussion on the framework for PCV investment policy

Following my previous suggestion I hereby start a discussion on the framework for PCV investment policy in keeping with its presumed purposes, i.e.: while maintaining peg to be able to withstand any shocks and mitigate risks including, but not limited to those of market, macro (cyclical), regulatory, technological nature; driving Fei integration with a broader panel of DeFi protocols; funding Fei R&D, grants and other causes deemed necessary by the Tribe community; possibly, stimulatin…

A few thoughts towards algorithmic PCV management

For the purposes of portfolio management PCV is divided into Collateral fund and Yield fund. Funds necessary to guarantee 110% Fei collateralization go to the Collateral fund, the rest — to the Yield fund. Collateral fund management is governed by the primacy of monetary policy with two main objectives: providing enough liquidity at any given moment and preserving value of the reserves in the long run. Yield fund management is governed by the purposes of serving other causes deemed necessary …

I plan to continue this work, hopefully joined by other fellow Triberians.

How will you report your progress to the community (weekly calls, reports)?
Could have some weekly AMA on discord/discourse, although I still think this is counterproductive.

Please, discuss!

Do you approve the creation of this Tribe working group?

• Yes
• Yes, but…
• No

[DioDionysos]

Thank you for starting the initiative.

My first question is regarding this:

@pavel

I’m @pavel the leader

Would you plan on managing the entire PCV by yourself? If so, what qualifications do you bring to the table?

If not, then are planing on hiring people? Risk management? Devs? etc

@pavel

It will be a permanent group with the first draft of the whitepaper coming in weeks and a bluepaper in a month.

If you plan on establishing a permanent group, how can we hold you accountable, if you(your team) do(does) not deliver? Is there a deadline or trial period?

[pavel]

Thanks for participation!

@DioDionysos

Would you plan on managing the entire PCV by yourself? If so, what qualifications do you bring to the table?

If not, then are planing on hiring people? Risk management? Devs? etc

As I’ve outlined in the ‘group aims’ paragraph, the goal is to design and build the foundation of the algorithmic autonomous PCV management vehicle in accordance with investment and risk management principles drafted by the group in a whitepaper and a bluepaper, which will then be presented by the group to the Tribe, approved by the DAO, implemented in code, for instance, as a set of contracts for a Balancer V2 smart pool (aka asset management pool) and then approved by the DAO as essentially an augmentation of the Fei Protocol itself.

@DioDionysos

If you plan on establishing a permanent group, how can we hold you accountable, if you(your team) do(does) not deliver? Is there a deadline or trial period?

As I’ve outlined, I suggested a conditionally-vested compensation, not only here, but for other groups as well: a payout is made once the result is approved/accepted by the DAO. We can also introduce some time limits, although I have doubts regarding this in terms of impact on the quality.

As for the permanent nature of the group, what I meant is that there is some foundational work, which will take full-time big efforts, but in a limited time frame (maybe 3-4 months). Then the work will mainly focus on maintaining code, some support, will in no way require full-time efforts. I don’t plan to work on this till retirement

[mans9841]

Thanks for the message @pavel .

You are proposing to form a group that is going to manage more than a billion dollar. Your idea seems good but here are my suggestions.

• First, the community needs to trust you that you are credible and have the right skills to lead the billion-dollar PCV group. So, before outlining the proposal, please do state about your qualifications, skills, and abilities (Ex, Pangolin Product Manager - Pangolin Project Manager - DAO - Pangolin Governance).

• My suggestion is also to present the Vision of the PCV Working Group in a more structured approach at a high level. This does not need to very detailed but at least community members can get a sense before we move further to voting or anything else. One of the ways is below. This is just an analogy.

  • Vision - Vision involves creating the purpose of the protocol to achieve in the medium term (1-2 years perhaps) in a sustainable fashion, thus making the group members who establish it also accountable for its delivery. Example, vision of Tesla is “To accelerate the world’s transition to sustainable energy”.

  • Strategy – Strategy is related to defining the objectives to be reached to realize and achieve the vision. One of the strategic plans is to “Reducing greenhouse gases”

  • Tactics – Tactics encompasses materializing policies and ways-of-working to reach the strategic objectives. One of the tactics is “Investment in a new machine”

  • Operation – Operation relates to the organization’s base, responsible for the deployment of the strategic plan under the established business model. One of the operations is “Employee scheduling”

• Also, the skills of the candidate in the working group must be appropriate and spread to the right degree. Unless required, no two candidates should have same skills but cross-functional or let us say all-rounder skills can be tolerated. Risk management, reporting, contingency plans, and accountability should be very fundamental.

And the same can be followed by other working groups. Off course, this is just a suggestion but I hope this will help in some sort. Later, a group charter standard can also be developed.

[pavel]

I’m sorry, but I have the impression that you didn’t even read my proposal. I’m not going to manage a billion $ fund. I’m suggesting that a framework is built that nobody has to manage it manually and then to suggest this framework for approval to the DAO. Please reread the proposal.

[redball]

They are doing you a favor by asking you leading questions that a leader (even though it’s self-proclaimed one) should be able to answer. Vision, Strategy, Tactics, Operations are foundational for any new endeavors and you should be able to at least provide an idea. On the contrary you are coming off as standoffish by coming short with them and deliberately avoiding parts of questions like qualification (you don’t have to dox yourself). If you are trying to take on responsibilities and move up in the world always be flexible enough to consider other’s opinions.

[mans9841]

Ok I see. Sorry for that. I got an impression that you will lead the PCV Working Group. I don’t understand the mechanics of auto-management, but with the debacle we have seen with FEI, it is hard to trust the auto-management thing at this time. May be different story later.

But still I think all the things I mentioned are fair.

[pavel]

Seems like @mans9841 is ok with me coming standoffish. He misread my proposal, this happens. Let’s maintain friendly climate here, the way this forum has always been.

[rekky]

Hi, I agree with Pavel. His idea is to enhance the project of FEI/TRIBE and governance with use cases and building a laid out plan for FEI/TRIBE with further implementations. At no point is he saying he will solely manage a billion $.

I’ve seen many stating on the topic how can he be held accountable if you or your team does no deliver? I would just like to point out the project from the start failed constant coding errors and exploits. Yet we still stuck by the team and allowed them to correct their mistakes. I don’t see how this would be any different. It sounds like a team that will work together full time to build simply on Tribe not destroy it.

If you read the post correctly he wants to put together a team to help TRIBE further. Not destroy it at any means. Way it looks as though people want a slot for themselves. That’s my opinion anyway. You have my vote pal.

[xzibiting]

Here are some thoughts:

• I think we should also attempt to form a more concrete goal, perhaps easy to quantify, as a lot of what will help us in writing this whitepaper is to learn from doing. Perhaps something along the lines of put to work X% of the PCV between N amount of different possible integrations. That said, a healthy in between of doing and thinking should be defined, for we don’t want to go too far down one path

• Small thing but I think any stipend should be denominated in Tribe. This aligns the incentives between the team and the project better. I believe the one time conditionally-vested payout upon dao approval is best as well, since money coming in half way through anything always complicates things

• I believe that mandatory weekly calls/reports are important simply for the case of transparency. I would have no problem talking to group members and putting together a simple summary to publish every week. Agree that we don’t need any sort of AMA, as I think people can just ask us whenever on discourse/discord as we shouldn’t have anything to hide from the community.

[arcology]

Hi @pavel great proposal for this.

I’m a bit skittish on a fully autonomous PCV management system. I believe that it should be tweaked at regular intervals so that it can better and more accurately reflect current market conditions - especially if the cryptosphere is more sensitive to memes/social media compared to fundamentals. Would there be review by WG members (such as yourself) to ensure the stability of this mechanism?

[xzibiting]

You raise a good point here.

I think there will be many good opportunities in the future that will have more risk or be too complicated for an autonomous system to properly handle. A more realistic vision of the goal would probably be a healthy mix of more autonomous strategies vs ones which require more active review.

[nanobro]

Great idea. Is it possible to give more info about you guys in the team? Track records, skill set, etc.