A translation of @orthopaedics’ thoughtful proposal, for a novel way to maintain the long term peg of FEI outside of reweights and Undos:
The fundamental reason for the current conundrum:
- An imbalance between funds already inside and new funds outside of the Fei-tribe system: there are too much funds inside the system as proportional to real stablecoin demand, leading to a lack of new inflows. At the same time the level of external arbitrageur flows is clearly insufficient to restore FEI to its peg.
Solution:
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Increase the opportunity for arbitrage for funds already inside: to increase the price of FEI by circulating funds already inside, therefore allowing for a degree of price increase of FEI without the need of external arbitrageurs.
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A potentially new usage of TRIBE should be to defray transaction costs.
Measures to Implement:
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Burn and Mint mechanisms will be made obsolete in this vision;
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Anyone who wishes to exit must be allowed to leave at a price not less than $0.9. In the long run, an exit rate substantially lower than $0.9 would be hugely destabilizing to the system (already proven by recent events),.
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Users can lock TRIBE tokens to receive DEFRAY CREDITS, which can be used to trade FEI for ETH at higher than prevailing prices; the exact amount of abatement is determined by the quantity and length of the lock (similar to the locking of CRV, the maximum time of lock should be regimented by months, which is also the approximate time for the system to circulate; faster circulation will increase the certainty of the profitability of the arbitrage, which is beneficial for restoration of the peg). This will allow people who have previously locked TRIBE to achieve risk-free arbitrage through buying FEI, and on the other hand, allow the people who have received airdrops to exit their positions in an orderly manner by locking their TRIBE, while mitigating the sell pressure for TRIBE at the same time.
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Create a single token LP pool (without impermanent losses) for FEI, which awards TRIBE; when FEI is trading under $1, holders of FEI may, after a period of locking their TRIBE tokens, use their Defray Credits to exit. The certainty of exit is critical to arbitrage
In conclusion:
With these measures, holders of FEI can purchase TRIBE for staking purposes and achieve a better exit than they otherwise could have gotten. While holders of staked TRIBE can purchase FEI when it is trading under $1 for a guaranteed arbitrage income.
This provides an incentive for people holding both FEI and TRIBE, and is better for the positive feedback of the system. The current situation tends to push people to holding either entirely FEI or entirely TRIBE depending on their outlook, which has caused opposition in the governance process.
*Orthopaedics have said that he has prepared extensive formulas and code for this vision already, he will share them here some time later