Fei Money

Forum: https://tribe.fei.money/t/extending-aave-tribe-incentives-for-fei-borrowing/3996

Update: After carefully reviewing all the feedback from the forum and discord (FIP-87 - https://discord.com/channels/787417509136957450/951249005222965319) discussions, this is an updated proposal with two options for reducing current TRIBE rewards by 25% or 50% while extending them for another 6 months. Clearly, both sides of the argument to extend some incentives and remove them have merits, and while imperfect, this proposal pushes both Tribe DAO’s goals forward. Extending FEI’s presence prominently displayed on Aave markets while significantly reducing incentivization of undesired behaviors. Ultimately, Tribe DAO should continue to review and evaluate how to better optimize FEI’s positioning on Aave, Compound, and other lending platforms.

Summary: Aave is one of the most dominant lending/borrowing markets in DeFi, and having FEI as a prominent borrowable and collateral asset helps further fortify Fei’s position in the space. Success of the initial deployment of FEI was partly driven by a 4M TRIBE incentivization of borrowing over the past 6 months on Aave. These borrowing incentives will expire on March 23, 2022.

In addition to increased visibility and other benefits to the FEI ecosystem, the Tribe DAO generated 1.7M FEI in fees from the initial 50M FEI deployment on Aave, which has been reduced to 15M FEI during the recent contraction policy execution.

Also, the native stkAAVE incentives offered to the Tribe DAO last round were about 1% of the total stkAAVE incentives because FEI is about 1% of the volume right now. FEI will likely be offered a lower amount in the future if there is an extended period of non-incentivized lending/borrowing, especially when most other tokens on Aave are being incentivized.

This proposal is up to vote to add 2M or 3M TRIBE and the extension of incentives for another 6 months from 23 March 2022, ensuring ongoing lending and borrowing activities on Aave. This represents a 25% to 50% reduction in the current amount of incentives.

Motivation: There are many advantages to a strong presence on Aave, both as a borrowable and collateral asset, and the DAO should continue to explore and optimize the approach to grow this and other stronger partnerships. Also, low borrow rates mean that FEI will be borrowed and likely redeemed against PCV and if the borrow rate is lower than the PCV’s yield rate, then that could slow PCV growth.

Voting Rules:

Yes, extend Aave incentives for 6 months at 25% reduction (3M TRIBE) Yes, extend Aave incentives for 6 months at 50% reduction (2M TRIBE) No, do not extend

Yes votes will be combined for decision on extending the incentives vs. No votes, and if the combined Yes vote prevails, the amount with higher amount of votes between the two Yes options will be selected for a subsequent on-chain vote.