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.
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.
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
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.”
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
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.
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?
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.
I’ve chatted with some people from Fei DAO to add more structure to the swap and create a Partnership Agreement around it. Comment and feedback on the Partnership Agreement are welcome: Partnership Agreement BalancerDAO <> Fei DAO - Google Docs
Next steps
Submit the proposal to Snapshot from Balancer’s side
So according to the proposed agreement, FEI after the swap would deploy its BAL tokens into our 80/20 pool effectively turning their holdings into a yield generating asset (This will also dilute rewards for current LPs, concentrating more voting power towards a single entity). What about our TRIBE and FEI tokens? Where can we deposit those tokens to generate similar APRs? I struggle to see how this would benefit Balancer. Would already make more sense if they could offer similar conditions (current APR 22%) or lock their tokens without accessing our 80/20 pools.
I agree with @Andrea81 and would like clarity on this topic. Additionally, I feel that there are different states of how people are informed. I for example couldn’t find any meaningful information why this partnership has to happen. I can take the blame on me but I think the community should get more transparent info before we move to a vote. I would like to see following questions addressed:
-Why do we need this partnership?
-How do both parties benefit from this proposal?
-What is the long term plan?
-How are those treasuries managed?
-Why can FEI deposit LPBs in our pool and we don‘t get any equivalent alternative?
I agree with your points @Andrea81 on the depositing of BAL vs. no deposit of FEI/TRIBE resulting in Balancer’s treasury not earning any yield. It seems like we should be eligible to stake at least a portion of the FEI/TRIBE to earn TRIBE. However we would be depositing to UNI. Not necessarily a negative, but wanted to highlight. Also, the reason I say a portion is due to the fact that their pool is earning 52.6% APR where the BAL 80/20 is earning 22%., but maybe that doesn’t matter and we are free to do what we like.
Those values will obviously change over the next year, so maybe the amount deposited is something that we discuss on a quarterly basis if we aren’t looking to deposit the full amount. In either case I don’t think we should be diluting our BAL holders for nothing in return (we also can’t pump more BAL incentives to the 80/20 pool to offset the dilution without impacting other pools), that sends a negative message to the community.
As for the questions about why do we need this partnership, FEI is moving a good amount of money into the Balancer ecosystem. A treasury swap sends an additional message that our relationship is longer term in nature.
lastly, there was the below point in the original post, so maybe this slipped through the cracks in terms of making an official point in the agreement
Balancer DAO is eligible to earn additional TRIBE by participating in Fei’s incentivized staking programs (Uni v2, Rari, Curve, etc.)
Would love to highlight this sentiment. Fei v2 has a substantial Balancer integration which will likely move 100s of millions of TVL over from our PCV including other DEX integrations. In the future this will likely be in the billions.
That alone should be a great signal of long term partnership.
In addition, the Balancer DAO will be able to stake TRIBE and FEI to grow their ownership in the FeiRari Fuse pool: https://app.rari.capital/fuse/pool/8 or elsewhere. The FEI can be used to cover operating costs to avoid market selling BAL which could impact the price.
We are really excited to work more closely with the Balancer community and hope this partnership strengthens both projects!
I would like to echo @joey 's message by adding that not only is this partnership an opportunity for Balancer to grow its TVL by likely billions with Fei PCV, but also (and maybe even more importantly) that this will set a precedent for other DAOs and protocols to use Balancer in a similar way.
We should not see partners holding BAL long term as a conventional cost/expense for our ecosystem fund, this should be seen as an opportunity to have key partners like Fei staked in Balancer and interested in using and working with us more and more (e.g. possible future migration of Fei from Uni V2 to us).
