FIP-13: Light Lending Deployment Framework

Forum discussions:

https://tribe.fei.money/t/fip-13-a-framework-for-fei-lending-deployments/3405

Abstract

This proposal establishes a light framework for deploying FEI to lending integrations. It will be applied to determine which types of lending deployments can be taken straight to the DAO without a snapshot. This framework does not cover non-lending integrations or TRIBE incentives. All FEI deployed will be minted, up to 50% of the protocol equity (PCV - user circulating FEI).

Motivation

Lending FEI deployments accomplish a few key objectives:

• Bootstrapping markets - without an original source of FEI to borrow, markets cannot have borrowers and can’t have the APY to generate yield.
• Partnership - being able to easily bootstrap USD liquidity for leverage in a market is a strong value prop for potential partners (for example the Olympus pool party integration)
• Visibility - by being in many markets with high liquidity, people see and use FEI in diverse places.
• Earning yield for PCV - by earning FEI back to the protocol, we improve the collateralization and net PCV equity

Proposal

We should aim to deploy FEI to help bootstrap markets wherever possible, with sizing scoped to the maturity of the market. This proposal includes the following framework:

• High Maturity (1b+ TVL) - 25-50m - e.g. Aave, Compound
• Medium Maturity (100m+ TVL) - 5-10m - e.g. FeiRari Fuse, CREAM
• Low Maturity (<100m TVL) - 1-2.5m - e.g. Fuse and Kashi partnerships

This framework is somewhat subjective, but it will allow us to move more quickly on these integrations as we assess the market demand for FEI liquidity across various platforms and userbases. For example FeiRari received exceptionally high FEI minted due to its strategic importance to the DAO. Other risk factors such as liquidity and volatility of other assets in the pool should be considered as well.

This proposal caps the size of overall lent out FEI, to prevent a Soros attack (borrowing and shorting FEI to drain protocol reserves). A limit of 50% of PCV equity (PCV - user circulating FEI) would be authorized under this framework.

If approved by the community, this will include a single combined DAO vote for:

• 2.5M Kashi FEI-ETH
• 2.5M Kashi FEI-TRIBE
• 5M C.R.E.A.M FEI
• 1.33M Olympus PoolParty FEI
• 1M Index Coop Fuse Pool

Future lending integrations can be taken straight to the DAO without explicitly snapshotting each integration. Included will be future Kashi pairs and Fuse pools with partner protocols being approved for 1M FEI to bootstrap liquidity. The DAO should both be proactive in pursuing these partnerships and allow applications from other interested DAOs and protocols via the forum. This framework is not meant to be final by any means, and should be open to periodic review as markets evolve.

Voting Rules

Voting will last 2 days. Beginning Saturday July 17th 12:00 PST, and ending Monday July 19th 12:00 PST. 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 are:

• Approve the light lending framework
• Do not approve the light lending framework

This is a single choice vote, if option 1 wins the majority, we will submit a DAO proposal after the end of the snapshot vote for the listed integrations. Future integrations will also be taken straight to the DAO.