I’m failing to see how the incentivized FEI/TRIBE pool adds value or supports the underlying mechanics of the Fei Protocol. The extra incentives for this pool proposed in FIP-2 make me question whether the team understands the benefits (and downsides) either.
As a TRIBE holder, participating in this pool 2 means that:
- I need to take on risk by purchasing FEI in order to LP with my TRIBE.
- When the price of TRIBE goes down, I take on extra risk by purchasing more TRIBE.
- When the price of TRIBE goes up, I lock in losses by selling TRIBE at a depressed price.
If I choose to opt out of these risks, my TRIBE holdings get diluted and probably sold on the market at double the rate. FIP-2 is objectively bad for TRIBE holders, which is contrary to how it is being positioned by the team. So I have to ask, what are we trying to accomplish by incentivizing more liquidity in this pool? If the primary goal is FEI stability, we’d be much better off incentivizing a FEI/stablecoin pool. If the goal is to increase demand and utility for TRIBE, there are a number of alternatives that would accomplish this while mitigating all or some of these risks. Some options:
- Incentivize single sided liquidity pools for TRIBE using DEXs such as Bancor or DODO.
- Incentivize lending TRIBE and using it as a collateral asset on protocols such as CREAM or Rari.
- If we must incentivize a double sided pool 2, it should be TRIBE/ETH or TRIBE/DAI (rather than FEI). This creates better separation of concerns and reduces risk for TRIBE holders with a similar outcome. This can be potentially done in conjunction with an incentivized FEI/stablecoin pool.
Have any of these avenues been considered? I’d also love to hear any arguments in favor of the current approach.