[Proposal] Treasury Swap: Balancer DAO <> Fei DAO

Hi - Brianna here, core contributor at Fei Protocol. Fei has created a stablecoin that stabilizes itself through transparent on-chain reserves.

We recently announced Fei v2, introducing a way to algorithmically manage volatility risk through a custom Investment Pool using Balancer v2 platform. This has the potential to add Fei’s current PCV (currently $913M +) to the Balancer platform. Tribe Community is excited to team up with Balancer!

As Fei v2 implementation anticipates bringing significant TVL to Balancer, it would be beneficial for our communities to further our alignment through a Treasury swap.

Inspiration for this proposal came from our mutual friends at Index Coop.

Benefits include:

  • Treasury diversification into two assets (FEI, a stable asset, and TRIBE, with governance rights and Protocol Controlled Value performance upside)
    • Balancer DAO is eligible to earn additional TRIBE by participating in Fei’s incentivized staking programs (Uni v2, Rari, Curve, etc.)
  • FEI would give Balancer stable assets in its Treasury
  • Distributes tokens into the hands of a long-term ecosystem partner
  • Governance power for DAO proposals

Specification

200,000 BAL from the Ecosystem Fund would be exchanged for the equivalent USD value of TRIBE and FEI in equal proportions from Fei DAO Treasury, using the 20 day smooth moving average price at the time that voting ends. Currently 1 BAL = 22.49 FEI = 34.33 TRIBE. Price feed will be BAL/USDT (Binance) and TRIBE/FEI (Uni-V2) FEI/ETH (Uni-V2)

Fei DAO will deposit BAL into BAL/WETH 80/20 paired with ETH from the PCV and commits to holding for the long run. The Fei DAO will also be eligible to earn BAL rewards, which will be further held by Fei and possibly reinvested in the 80/20 BAL/WETH pool.

Balancer commits to holding TRIBE for the long run and using FEI for operations.

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Thank you for making this proposal.

I think clarifying the “long run” by each side committing to a holding period of at least 1 year might be good.

Other part of this that is a bit painful is selling 100k BAL for a stablecoin at this depressed price (-70% from ATH). But I guess it is OK if we prioritize using FEI over BAL for near term funding endeavors like the Grants program renewal.

6 Likes

Very pro treasury swaps with partners. All I would say is if we’re buying FEI we probably don’t want to then be depositing it into competing liquidity protocols like Uniswap, Curve, etc.

Has there been any thought put into the deployment of an incentivised FEI stablepool on Balancer?

Agree with @DavisRamsey point about holding periods too.

edit: perhaps could chunk this up over a quarter, with swap taking place on last day of the month, so Oct 31st, Nov 30th, Dec 31st to balance out market volatility and not swap a big chunk of BAL for FEI at a potential low

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As someone who works closely with both the Balancer and Fei teams, it makes me incredibly happy to see these two communities deepening their partnership.

I strongly support this proposal, while agreeing with @DavisRamsey’s suggestion that “long run” be defined as “at least 1 year, and hopefully much longer.”

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Holding for at least 1 year works perfectly. Let’s consider it added to the post.

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Just wanted to say that I’m a big fan of the proposal too, I’m looking forward to having the FEI community be one of the largest BAL holders and long-term governors of Balancer Protocol :pray:

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Hey! Bruno here from Fei community!

We moved this proposal to FEI DAO snapshot: Snapshot

don’t we need to vote on this at the same time? we’re supposed to lock in the price of the trade when the vote ends.

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Good question! Because I imagine FEI DAO still need an onchain vote after this snapshot. So maybe the onchain vote would need to be at the same time.

@brianna what do you think?

ah, I’m not familiar with your governance process but if on-chain is required for it to be binding then that is the one we need to run simultaneously with a Balancer snapshot vote (our binding vote atm).

I think so, when we did the other OTC with Index Coop we needed a onchain vote. So it is better to do at the same time our onchain with your snapshot voting.

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Yes, we will need to submit an on-chain vote if the snapshot passes. We can run the on-chain vote simultaneously with the Balancer community vote. Assuming the Fei Snapshot vote passes, when will the Balancer community be ready to submit, @DavisRamsey?

well, I’m not necessarily the authority but it’s been 2 weeks and no one’s spoken against it so seems like we are ready to proceed to me. I’d say check with Fernando but he just went offline for a week. When are you looking at doing your on-chain vote?

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I think engaging in treasury swap is a good way to strengthen a protocol’s position in the overall ecosystem. I like this proposal.

What are people’s expectations how Balancer DAO engages in governance of the TRIBE ecosystem?
Balancer DAO would then need a responsible person who monitors TRIBEs governance and participates so that Balancer DAOs governance vote in the TRIBE ecosystem shall always aim for the best possible outcome for the Balancer DAO.

What do other people think?

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