Add FEI as collateral to Ruler protocol amendment, part 1

As an amendment to choochoo ‘s previous proposal (which can be seen here: https://snapshot.org/#/rulerprotocol.eth/proposal/QmevkgT6RGqVTg2amYZ7rGdCaMAxq14gRd1mRngGL5tdJJ), this proposal is to provide additional information and voting options for RULER stakeholders to arrive at a more desired / particular decision which the community felt like was missing (whereby such omission renders the result likely unrepresentative).

This part 1 proposal will gauge whether we should have a FEI pool or not, and whether such FEI pool should start off incentivized via RULER emission. Assuming the option “FEI pool with incentives” wins out, part 2 proposal will come shortly triangulating to the amount of RULER emission as incentive.

---

What should be recognized: the potential marketing and fee benefits to RULER

The proposer recognizes the following points by the choochoo recommendation:

• There could indeed likely be significant demand for the product – FEI holders could use some liquidity to bridge their liability side (whether it’s regaining ETH exposure or paying back ETH loans). Having a way to borrow FEI in non-liquidatable fashion is a unique value proposition.
• The fees and marketing generated via this event will be a positive (not counting the CAC spent for RULER emission for the time being).
• The passage is indeed a strong test case for ruler DAO governance.
• Given the high controversy, it indeed appears appropriate to put the matter to a vote.

---

What could remain the same: mint ratio = ~0.4

A poll was done to gauge lending interest: https://twitter.com/MapleLeafCap/status/1379649724400144387 While there are significant confounding factors and the poll results may be noisy / inconclusive, here are the findings:

• For those that indicated interest and assuming token inflation exists, the majority would be willing to lend at a 45-60 cent strike (which translates to 55% - 75% LTV on FEI price currently).
• Assuming the token inflation reward is not present – while 70% of the potential lenders above would no longer be interested, the LTV strike would likely need to be adjusted down by ~15 cents+, bringing the strike range to 30-45 cents (which translates to 37.5% - 56.25% LTV on FEI price currently). As such, this proposal will continue to allow for a mint ratio of ~0.4 and roughly ~50% of current FEI price. This would also appear to be the rough consensus within discord at the moment.

---

What changes: Yes / No decision on RULER inflation options

There are a few things to consider when introducing token inflation rewards to the LPs that lend against FEI collateral:

1. The pro is that the incentive will immediately incentivize liquidity to reach scale & accommodate FEI owner demand. With the assuming that APY on DAI interest alone is 10-60%, the addition of token inflation could easily push the total return to 100-300%+ APY.
2. The cons are multi-fold as per discord discussions – it’s possible that the LPs of FEI-DAI will not be long-term participants of the RULER protocol and will therefore exert meaningful downward pressure on RULER assuming inflation rate is high; additionally, as FEI continues to work through its issues, the odds of failure is also non-trivial – and a sizable emission would effectively create meaningful exit liquidity for FEI depositors at the potential expense of DAI lenders and RULER holders.
3. Given the passage of REP5 (a+b), if the emission of RULER turns out to be too much / not adequate, it can be adjusted on a weekly basis until maturity.

---

Voting options:

1. We should have a FEI pool with incentives, amount of RULER incentives to be voted on in part 2 proposal.
2. We should have a FEI pool, but with no RULER incentives.
3. We should not have a FEI pool.