Fei Money

Author: @elliot Status: Last Call With input by: @joey; @storm

Summary

Create an additional redeemability module denominated in LUSD. This module will be fully paused and will not be unpaused unless redemption demand increases significantly. The guardian, governor and OA will be able to unpause the LUSD redeemability module and will do so if there is enough redemption demand.

Specification

Deploy a fully paused redeemability module with the following parameters:

• LUSD as the external asset
• 50 basis point fee for redemptions and minting
• Reserve Threshold of 10m LUSD, any amount of LUSD over that can be sent to another deposit
• Buffer cap of 10m FEI (max amount of mintable FEI a single tx can take)
• Buffer refills at 10k FEI per second
• 0 incentive for keepers on the PCVDripController
• 5m LUSD per drip, once every 30 minutes
• Unpauseable by the guardian, governor and OA

Motivation

As FEI is a fully asset backed stablecoin, the protocol should be prepared for redemptions whenever they occur. Currently, the only way to sell FEI back to the protocol is through the DAI redeemability module. There is an ETH redeemability module, but it only mints FEI in exchange for ETH and does not allow redemptions of ETH for FEI.

This proposal aims to create a paused redeemability module denominated in LUSD so that the protocol can buy back FEI with its large reserve of LUSD if there are large amounts of redemptions. The reason for going live in a paused state is because there currently is not enough redemption demand to warrant opening this module up. However, if redemption demand changes, the redeemability module will be unpaused by the guardian or OA.