OIP - 92 : Whitelist FEI as a treasury Reserve asset

Summary

Whitelist FEI as our next reserve asset to be accumulated through treasury rebalancing or bonds.

Background

Fei protocol launched around the same time as Olympus DAO a little over a year ago. After a rocky start, Fei Protocol made a few key changes to its initial design and has since then found stability. Fei protocol’s Protocol Controlled Value (PCV) currently sits at ~$700M in assets at time of writing - mostly composed of ETH (70%+).

This PCV can be seen as the backing of FEI stablecoin - as the protocol offers 1:1 redeemability with a 0.5% spread. As of today, User-FEI has a circulating supply of ~300M FEI, is highly liquid and the Fei Protocol has mapped a path to diversification of its PCV - with the goal of being able to better withstand market downturns. For example, Fei V2 uses Balancer V2 pools with algorithmically changed weights depending on FEI’s collateralization ratio to manage risk during volatile market conditions.

Motivation

The Treasury team has been exploring and evaluating multiple options for the next reserve asset and have reached the conclusion that FEI is the best candidate at this time. Specifically, one of the Treasury team objectives is to ensure that OHM’s backing favors decentralized and censorship-resistant assets. Fei protocol’s approach to issuing the FEI stablecoin aligns with our objectives - given it is backed by decentralized assets. As mentioned above, Fei intends to diversify this backing further in order to make it less correlated with the price of ETH.

The addition of FEI stablecoin to our Treasury would also further align Olympus and Fei protocol - extending opportunities to collaborate.

Proposal

The Treasury team proposes to whitelist FEI stablecoin as an asset for the Olympus treasury. Our exposure would be capped to a maximum of 10% of FEI circulating supply.