Thank you all for your responses and insights. Some of my important questions have been addressed and I see now more clearly why we would want such a partnership. I am now in support of this proposal.
5 Likes
Hi, as stated previously this partnership agreement is a good opportunity to see multiple Balancer building blocks diffuse into further protocols. A few comments: The amount of governance voting power Fei DAO would be getting based on some of the last snapshot votes is big.
Grants wave 2 snapshot vote
the 200k BAL in the Fei DAO treasury would have quite some voting power.
For the approval of Grants wave 2 the Fei DAO would have been the biggest voter in terms of voting power, had the agreement been in effected and Fei DAO would have voted.
Staking vote
the 200k BAL in Fei DAO treasury would have even more relative voting power.
the address with the second-highest voting power in this vote voted with 60k BAL
Based on this sample set of past votes, it is clear that Fei Dao would have a high amount of voting power. This raises a key point:
- How can Balancer ensure no conflict of interest between Balancer and the Fei DAO will emerge.
Say a future similar proposal with a Fei DAO competitor would be up for voting. This future partnership agreement would benefit Balancer but simultaneously strengthen the position of a Fei DAO competitor in the ecosystem. I see a potential conflict of interest here.
Echoing what I said in the beginning that i like this proposal. What do others think?
6 Likes
This is an extremely important point that should be addressed.
I would like to know how the 200k were chosen. If there is no obvious reasoning behind such a large amount: what would be an adequate value that would not raise any conflict of interest?
3 Likes
Hi @Mkflow27,
you raise a very important point and something that has always been a strong concern: the voting power of big wallets and how their vote can influence, in a way or another, final outcomes. This is not a new issue.
The main reason for LM distribution is to decentralise power by distributing BAL tokens. Any initiative that goes in the opposite direction should be extensively discussed.
While I fully understand the good intentions, I would encourage deeper risk-reward analysis.
I remain doubtful about the usefulness of the swap and I do not see how this operation can/should influence a continuous excellent relationship between the two protocols.
3 Likes
Good to see the discussions advancing in Balancer side.
This proposal is key to celebrate the partnership as structured in the @LuukDAO doc. The continuous TRIBE buybacks using LBP already started and there is so much potential in using managed pools for PCV.
The swap amount is similar to the one Fei did to acquire INDEX. It represents 1.84% of Balancer circulating mkt cap. So, there are considerable voting power elsewhere with other Balancer holders.
Another point to highlight is that Fei community is very open to work with other stablecoin projects. We participated in the Saddle Finance pool with FRAX, LUSD, alUSD, we opened a DAI bonding curve and PCV holds 100M DAI. We are now discussing acquiring some 100M LUSD and also a partnership with Angle Protocol.
We are not in a zero sum game with other decentralized stablecoin projects. DeFi together is stronger, the market is huge and it is growing fast.
I am a fan of Balancer and the decentralized way this DAO works, it is an amazing opportunity to strenghten the partnership between the two communities.
5 Likes
I understand the concern with the influence that 200k BAL tokens would give to Fei DAO, however I would expect that if there is a vote where there is clearly a conflict of interest, other BAL token holders should be more than enough to tip the balance and ensure whatâs best for Balancer is approved.
We already had votes that had about ~1m BAL of quorum, I would imagine Balancer governance would be mobilized enough to get more than 200k BAL to win over a vote that poses a conflict of interest.
That aside, I think the major integration they are making with Balancer V2 should be a clear signal that they are betting on us, so voting for something that is short-term beneficial to them in detriment of Balancer would be against their own long-term interest. Balancerâs success as a platform will definitely influence the success of whatâs built on top of it.
The amount of 200k has just been an initial proposal, as @Bruno said similar to what Fei did with INDEX (which is also part of the Balancer ecosystem).
We should be encouraging of such swaps because this is what gets Balancer to be supported by many different parties (especially knowing the Fei team and how serious and professional they are). This could be a precedent for other strong partners to get interested in holding BAL and participating in our governance and ideally ecosystem as integrations.
I said this in the past about the need to be more generous with deploying BAL from the Ecosystem Fund to grants and bounties that add value to the Balancer ecosystem, Iâll say this again in a similar way: the more strategic swaps we do like this, the more well connected and supported Balancer will become in DeFi. If we donât, then I see a discouraging future where we will be isolated while other teams start acquiring stake/influence in other AMMs/competitors of Balancer (see this example with Curve).
A last good point is that by acquiring FEI the ecosystem fund would hold some stable value that helps diversify its current fully-long BAL position: that could prove very useful in a potential long bear market.
7 Likes
Thanks to @brianna for putting this together and pushing forward on cross-community collaboration.
Objectively, I am in favor of a stronger relationship between these two protocols. Itâs clear that both Fei and Balancer are optimizing for governance as a cornerstone of their community. This swap feels like a great way to better solidify a long-term relationship.
At first read, itâs difficult to conceptualize how much USD value this swap is asking for. I would also clarify if this swap is meant to be 50% FEI, 50% TRIBE.
Lastly, I would be interested in exploring the human collaboration between both parties. While the token swap is a good signal, the real value will come for consistent collabs between the Ballers and Fei community leaders.
As a part of this swap, it would be good to set up consistent work streams for both teams to continually optimize and formalize areas for integrations and composability.
Fire Eyes will be voting in favor of this proposal.
Nice work!
6 Likes
I agree, I do not see huge benefits for Balancer here. Instead it seems like Balancer is giving an opportunity for Fei while staking its reputation on Feiâs stability. As far as I know Fei already had issues with their tokenomics at least in their beginnings. That isnât to say they havenât improved since then but why put our name on something with such a cost if we arenât benefiting. Is there something we are missing, is there a benefit to our side here?
The concerns regarding voting power are also worrying and so while I would like to work with Fei I think there could be smaller less risk-prone steps that could be taken and such a decision shouldnât be rushed into
2 Likes
That is a really good idea. If Balancer members have interest, I could help from Fei community side to articulate a first meeting/workshop where we could met each other, understand how each community is organized and share some experiences in contributing to DAOs. We could also talk about the ways to incentivize community engagement and the experience with grants program. After a first contact, it can become more clear the next steps.
4 Likes
Ballers would love to do that Bruno 
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Great, @DavisRamsey! I sent you a message in Discord to start structuring this. 
Hey Squidz, I think many people in crypto community still hold this first impression of Fei. Now with Fei v2 is time to tell what happened during this time and how the protocol is stronger now. I wrote an article about it. Fei Protocolâs PCV holds $1.19 B, providing a 403% collateralization ratio for all circulating FEI ($294 million). In other words, if all users redeemed Fei, the protocol would still hold a massive amount of $892 million.
If anyone want to read the full article: History and Future of Fei Protocol - Crypto Kailash
3 Likes
Thanks Bruno I may have judged too harshly. I will take a look at your article.
I believe there may be more benefits to Balancer than I originally doubted, but I am still nervous about the voting power imbalance that could result if this goes through.
3 Likes
The swap was successfully executed: Ethereum Token Holdings 0xd51dba7a94e1adea403553a8235c302cebf41a3c information
Great to make this first step to build a long-term partnership between Fei DAO and Balancer DAO!
6 Likes
When will Fei DAO deposit BAL into BAL/WETH 80/20 as announced?
3 Likes
What do you think of the AMM market maker?
1 Like