FIP-6 Fei-Rari Integration

Links

Tribe forum https://tribe.fei.money/t/fei-rari-integration/3314 Rari forum https://forums.rari.capital/d/87-fei-lending-partnership Rari snapshot https://snapshot.org/#/rari/proposal/QmfWQxzbyZsKVT2BuH1ecaW8u5QkF4NnVwWguo498SB7sH

Basic Summary

This proposal would have Fei DAO assume admin control of the Rari Fuse pool 8 currently called "Tetranode's Flavor of the month”. It also includes a 10 million FEI deployment into the pool to bootstrap liquidity for borrowers. It will remain in the pool for at least 9 months while a market forms, to benefit from the reduced admin fee on the Rari side.

Motivation

Lending is a key use case for any stablecoin and Rari Capital Fuse was the first lending integration for FEI. Fuse allows for anyone to control the asset and interest rate parameters in a Compound-like pool. The current pool is owned by Tetranode and ChainLinkGod. It holds FEI, TRIBE, ETH and DAI.

If Fei Protocol were to acquire ownership of the pool it could add future PCV assets to provide a native way to get leverage and yield using FEI and protocol-owned liquidity.

Additionally, by supplying 10M FEI to the pool the DAO would be subsidizing borrowing rates and earning yield off of the early market formation. This could bootstrap future yield for FEI holders and drive FEI utility and cash flow for TRIBE. The Rari DAO is currently snapshotting a proposal to lower the admin fee from 10% to 6% given this TVL commitment for at least 9 months. This further tightens the spread to make interest rates as competitive as possible.

The principal and interest earned by the protocol would be burned if the liquidity is ever withdrawn

This proposal would mark the first instance of the DAO itself minting FEI to provide liquidity in another protocol. This pattern would not need any new code, as the DAO itself will be the holder and owner of the position.

In the future the community can consider setting an admin fee for the protocol to generate additional cash-flow from the pool, but for the current proposal there will not be a change to the admin fee.

Specification

The DAO proposal steps would include:

1. Accept admin rights on the Fuse pool
2. Mint 10M FEI to the timelock
3. Approve the Fuse pool to move 10M FEI
4. Deposit 10M FEI to Fuse

Voting Rules

Voting will last 2 days ending on Saturday, June 12 at 12pm PT This is a non-binding signal vote. Please keep in mind that snapshot votes can be changed but not withdrawn until the end of the voting period.

The two options to vote on are:

• Yes
• No

If this vote passes with a Yes majority, the specified changes will be submitted for an on-chain DAO vote.