Summary

Raise reserve stabilizer backstop from $0.95 to $0.99

Motivation

FEI is a stablecoin. Two of the most important features of a stablecoin are 1) stability to its peg 2) user trust that this peg will always be maintained.

The primary mechanism that FEI uses to maintain its $1.00 peg are reweights. When FEI is trading at less than $0.995 on the FEI-ETH pair on Uniswap V2, the protocol will “reweight” the price by buying enough FEI to bring the price up to $1.00. This process currently occurs as often as every 4 hours.

Fei has an additional peg maintenance mechanism that is much less frequently used, the reserve stabilizer backstop. This mechanism allows each unit of FEI to be redeemed for $0.95 of ETH. This mechanism was implemented in FIP-2.

Since the protocol is continually growing stronger, it is time to consider raising this backstop from $0.95 to $0.99, much closer to the peg value of $1.00. This would give a strong signal to potential users that the protocol is able to maintain its peg.

Advantages:

• Increased confidence in FEI by current FEI users, prospective FEI users, and users of integrating protocols
• Every FEI redeemed through the reserve stabilizer still earns the protocol a fee, because the redemption value is lower than the face value of $1.00

Disadvantages:

• Could leave FEI more sensitive to stale oracle attacks

Voting Rules

Voting will last 2 days. 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 Please keep in mind that snapshot votes can be changed but not withdrawn until the end of the voting period.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:

1. Yes, raise reserve stabilizer backstop to $0.99
2. No, leave reserve stabilizer backstop at $0.95

This is a single choice vote, if Yes wins with greater than 50% approval and 10M TRIBE quorum, the proposal will be submitted to the DAO