FeiRari Token Merge

Joey

Hi everyone! This is Joey, founder of Fei Protocol.

The vision for TRIBE has always been to build out the DeFi that we all want and need. Financial primitives that can scale and network in a permissionless way, free from the inherent bureaucracy and fat that comes from laws not written in code. Fei and Rari have each captured a critical piece of this vision, the fully decentralized algorithmic bank and the permissionless money market. Together, we can achieve even more.

It is for this reason the Rari DAO and Fei DAO core contributors would like to submit an ambitious proposal that would change the DeFi landscape forever: a merger between RGT and TRIBE.

Together, a Rari and Fei merger would create a fundamentally new type of DeFi platform, and there are no two DeFi projects better suited for a merge. Uniting forces will compound our existing strengths.

Why A Merge Strengthens Rari and Fei

Rari and Fei’s strengths play perfectly together, with many synergies coming from an RGT/TRIBE merge. The main bottlenecks to Fuse’s growth are bootstrapping pools with initial liquidity, and ensuring manipulation resistant oracles for long-tail assets. The Fei DAO can easily provide this initial FEI liquidity to solve the chicken-and-egg problem, and has already done so in 15 Fuse pools, including 8 of the top 10.

Tighter integration between the protocols would enable fundamentally new types of DeFi services. On Rari, the oracle problem is a major bottleneck, and the Fei DAO can help scale this through Liquidity as a Service with Ondo. By quickly and cheaply spinning up deep liquidity on Uni v3 or Balancer v2, protocols can get a manipulation resistant full-range embedded TWAP oracle to power the Fuse market. Combined with a FEI liquidity deposit, users can go end-to-end on any trade they would like to achieve in the market with existing FEI liquidity. As more pairs begin to form against FEI, the network effects grow for Fuse and FEI to list more assets and more pools with more utility for each.

A united front between Rari and Fei will enhance this relationship. For any token, Fuse becomes the easiest and most frictionless way to scale out utility, and FEI becomes the most liquid pair.

Our communities and teams together already have a synergistic relationship. The Fei DAO is actively developing cutting edge Fuse infrastructure:

First DAO owned pool
First incentivized pool (with dynamic incentive controls through TRIBE rewards contract)
Generalized Plugins including LUSD Stability Pool
Oracles through LaaS + Balancer

A merge cements a long term relationship and unity of fortune that can’t be achieved by a token swap. It sets up a broader vision to be the focal point of DeFi innovation for the foreseeable future.

What would a merge look like?

High level goals:

Minimize friction + maximize simplicity of a merge
Full long term alignment
Short/medium term independence with roadmap convergence

Conversion of RGT to TRIBE

Take the USD-denominated value of the RGT and return the equivalent amount of TRIBE. We can use a neutral third party and historical price data to ensure that this is done in the most fair manner and such that it is not prone to manipulation. Some options include Gauntlet, Llama DAO, and Reverie.

The existing RGT treasury can be covered by existing TRIBE treasury. Remainder will be newly minted TRIBE.

Given that this affects token holders of both protocols, this is a key point where we encourage community feedback on how the third party can structure the swap.

The Hack

Utilize FEI to pay back the victims of the previous hack. This would be paid in FEI at the ETH price from the time of hack via a merkle airdrop. In a future proposal, both communities should establish a policy for future hacks so there is no ambiguity for the community.

Governance

In the near term, the Rari Capital DAO and processes, including all smart contracts, will remain identical, swapping out RGT for TRIBE. Longer term both protocols can converge on a standard set of governance practices.

The Brand

Initially keep discord/twitter/protocol brands all distinct and identical to current situation.
Should come up with epic unifying rebrand for TRIBE together in a separate proposal.

Contributor Collaboration

Establish a joint task force to build cross-protocol integrations and keep long term roadmap alignment, and provide additional treasury resources for the existing Rari Infrastructure Task Force, 6M TRIBE and 6M FEI to vest linearly over 3 years.

Conclusion

Rari has built the perfect credit, yield, and leverage marketplace for protocols through Fuse. Fei has a powerful combination of decentralization, scalability, and protocol controlled value, and is positioning itself to be a major partner and base infrastructure for the next wave of DeFi.

By joining efforts, new projects will see the Rari + Fei combo as the no-brainer destination to grow utility for their token holders. Together we can design systems that seamlessly integrate the entire experience for partner DAOs to level up the existing product-market-fit of Fuse and Fei as individual projects. Eventually, our combined protocols will be a home for all cryptoassets a hub of DeFi innovation.

Both teams are incredibly excited about the potential of this merger, and we hope to hear all of the community’s thoughts and discuss together!

Here is the sister post sent by @jai on the Tribe forum: https://tribe.fei.money/t/fei-rari-token-merge/3642

toshea

The FeiRari Token Merge is a genius move but Jai and Joey. Here’s why:

What does Rari need?

Protocols creating new growing Fuse pools
Stablecoins to lend in these pools (Take a look at the most successful Rari Fuse pools, and you’ll see large supplies of Stablecoins. Conversely Take a look at pools with lower adoption, and you’ll see a lack of Stablecoins)
Final closure on the hack by making the refunds

What does FEI need?

Adoption
Trust

What do FEI and Rari both need?

Product market fit
Security
Layer 2 rollouts
Ability to create new products

A FEI + Rari merger solves the above creating a Defi powerhouse.

What does crypto need?

A truly decentralised Stablecoin to protect against a governmental rug pull
Early DEX and lending liquidity for new protocols

Rari + FEI solves both.

Looking at RGT holders objections...

Valuation: RGT is worth more than TRIBE. Valuation is subjective, but I understand the sentiment here following the start of FEI. Jai has proven himself a transparent, trustworthy leader, so why would Jai agree to something that undervalues Rari? Because it doesn’t, he can see the bigger picture and long term vision. TRIBE is trading at less than its asset value too.

RGT holders don’t want TRIBE. What is missing here is that RGT holders are not getting TRIBE, but new TRIBE, the RGT + FEI combination, which is way more powerful.

TRIBE treasury and RGT dilution. FEI is currently using its treasury for incentives more than Rari. But Rari has 2x dilution already passed. Treasuries drive protocol usage, and emissions schedules can be changed. Joey has Tweeted, “this may well remove the 2x [RGT] dilution proposal or at least most of it”. Look at Rari; the pools are not incentivised, so a combined entity with the synergies, the emission schedule for TRIBE could be way less if it’s not required.

Rari could create a Stablecoin. Yes, we could, but who, how does it work, how long will it take, will it be trusted? There are many obstacles to making this happen, and it would take a long time and need more team members to make it happen.

The big wins

Fuse TVL growth. Currently, Fuse lends around $242m. Stablecoin deposits drive Fuse. FEI has $435m FEI in its PCV and can mint FEI to put into Fuse pools.
A trusted decentralised Stablecoin. When everyone trusts a decentralised Stablecoin, it wins and keeps its peg naturally. There isn’t a clear winner here yet.
Product development. Removal of development duplication. Better security, faster Layer 2 roll outs, better products, faster roadmap delivery.
Team and community. Take a look at what Joey and Jai have achieved individually. Then, imagine what they could come up with working together. Then, do a quick scan of the most successful growth businesses and protocols, and you’ll mega brain partnerships abound.

Short Term Valuation

There are short term benefits of the merger. First, TRIBE changes its perception and will trade a multiple to NAV rather than a discount. I don’t care about the short term, but it’s helpful for RGT holders to understand that this could be a short term price catalyst for TRIBE.

Joey and @jai can you explain your thinking about valuations so we can understand your methodology?

reginald_grarbs

So is this really just a merge of the RGT governance token with TRIBE to increase utility and sort of fix tokenomics? And of course the deeper benefit then becomes to alignment of the two protocols, innovating together, utilizing each other's strengths to resolve bottlenecks? If so, is there something that Rari is "giving up?" in this scenario that I might be missing?

WellFargoScammedMe

reginald_grarbs

RGT holders would be going under a 2.7x dilution.

austin

My initial question is why do the tokens need to merged, why not intertwine protocols and keep tokens separate?

austin

Second question: Will this alienate other stablecoins from seeding Fuse pools such as FXS and LUSD?

babi

this sounds really interesting guys! had a few questions while reading the proposal:

Fei DAO already provided liquidity to many Fuse pools and it could continue to do so. why merging now is better for Fei than continuing to operate independently?
i understand that besides building a really cool infra, Fei would benefit from a network effect for FEI (we are assuming people that create new pools in Fuse would choose to use uni v3 bootstrapped FEI pools as a price feed instead of another oracle provider) which is great for FEI. but what if that doesn't happen?
what are other major risks involved in the proposed solution?
could you expand on the long-term vision?

Xavier-RARI

This proposal is so heavily weighted towards TRIBE that this feels like a scam proposal.

RGT (data from Coingecko):
Market Cap $411,129,974
24 Hour Trading Vol $13,811,134
Fully Diluted Valuation $456,588,589
Total Value Locked (TVL) $1,163,402,281
Fully Diluted Valuation / TVL Ratio 0.4
Market Cap / TVL Ratio 0.36

TRIBE (data from Coingecko):
Market Cap $578,909,667
24 Hour Trading Vol $57,590,444
Fully Diluted Valuation $1,272,285,511

As any one with the slightest of brain can see, Rari is highly undervalue, especially compared to a useless shit protocol like $FEI which no one wants to use and the team is desperate to find someway to sustain their VC backed sinking ship. This is like AOL acquiring Time Warner in the internet boom and the epic destruction of Time Warners shareholder value. That time, even AOL sold the dream of the merger.

Joe first you fleeced retail investors in your FEI token sale. Next you fleeced FEI holders by not supporting backing FEI with TRIBE treasury, which anyway was not your money but what was raised from the community. Now you are here with this proposal to fleece RARI community. Disgusted to be honest. Why don't build something useful yourself after raising what is a shit ton of money.

If the want to merge with RARI, the minimum proposal you should propose a exchange rate of 1 $RARI for 4 $TRIBE.

austin

Xavier-RARI well

Xavier-RARI well ser you have just outed yourself as either an idiot or a troll. It’s $RGT not $RARI. And 1 $RGT = 29 $TRIBE atm

Xavier-RARI

austin Genius of you to miss the RGT at top. I have always called my bags RARI. And its 1$ worth of $RGT to 4$ of TRIBE for the uninitiated. RARI is undervalued and TRIBE is overvalued. TRIBE also has only a small supply of TRIBE unlocked currently so a lot of release is to come while Rari does not have such massive dilution event in the future.

daochemist

austin Nobody wants that $TRIBE token here. If we wanted it, we would buy it. This proposal makes no sense, Rari is growing, FUSE is being adopted, and already the rates are lowering. Why can't that be a partnership. Why hodlers have to be diluted? Why I gotta DYOR into TRIBE/FEI and have an opinion on the future of the stablecoin space? Why we have to tie our fate with that of another project? Why lose the branding?

This is sad, the community is getting played if this passes.

Mudca

Is there no other alternatives to achieve the same thing but without a merge? Maybe a new DAO only controlled by the two DAOs or something?

daochemist

No. Why would any holder in their right mind want to be diluted into some other protocol? It doesn't make sense. Why can't the two projects simply work together? Why mess with my coins?

WellFargoScammedMe

Xavier-RARI regardless of the current price and your opinion on the undervalued/overvaluedness, your argument is strong. I wouldn't bother with opinion based arguments when OBJECTIVELY this is a massive dilution for RGT holders. RGT holders should not be injected into the significantly higher market cap and FDV project that is TRIBE, especially considering we just diluted ourselves for the sake of the protocol a few months ago. Why not focus on your own community @jai maybe should have done a better job at negotiating a FAIR deal before supporting this proposal? I can understand he's hyped because of building and new opportunities but this one really cuts the community short. It seems like this is a little low blow to RGT holders considering protocol revenue isn't yet flowing back.

If RGT is to merge with TRIBE. It needs to be lifted up to the same FDV as TRIBE in value. That means a redemption value of 2.7x the current price. That is the only acceptable and fair way to do this. If TRIBE holders agree that we bring enough value to be considered equal as them and should be intergrated, than they would agree. As it stands now this is basically an insult.

And regardless of the objective arguments above, personally I think TRIBE is overvalued and this would bring on undue risk for little reward to RGT holders.

RGT holders are really gonna make a stand here to as a show of force and demand that this protocol is DECENTRALIZED. Despite support from leadership and TRIBE VC backers who also hold RGT, we will not stand for unfair dilution. This is our New York Agreement moment.

crypticbird1

I believe that the current consensus does not incentivise RGT holders to accept any movement in such a merger.

Instead of having a merger, why isn't TRIBE using their treasuries to buy a majority of RGT tokens and using their majority holding to veto a vote in RGT's governance for an acquisition? I believe this purchase can be done via a general offer to the first x% of RGT's supply at a fixed price (probably above current market price).

https://twitter.com/crypticbird1/status/1460307090841374728?s=20
I have written extensively about how DAOs can replicate tradfi M&As, and I hope this can benefit both the RGT and TRIBE holders in executing such a transaction. Do feel free to drop me a DM on twitter!

WellFargoScammedMe

toshea valuation methodology needs to be explained as well as why RGT holders need to under go a massive dilution. At the absolute very least, the migration window needs to be open for several months or indefinitely through smart contracts to accommodate low gas and low value users and in order to avoid forcing a tax event on long term holders who may be hundreds of multiples up on their investment.

toshea

WellFargoScammedMe

100x+ up on an investment is a nice problem to have and a credit to Jai and the Rari team. If they are have delivered 100x surely they have gained trust and goodwill?

Sound like your concerns are:

Tax event - which will depend on where you live
Valuation - the team can address
Gas fees - the team can address, my guess is it won't be a problem
Dilution - Is a personal view.I don't think this an is an issue, if you believe together, is better.

Jai is arranging a town hall so you can voice your concerns:
https://twitter.com/jai_bhavnani/status/1460693392292139008

This Thursday @ 430pm PT: https://evt.mx/uNsEf0i7

Xavier-RARI

toshea I don't think 100x or not matters. Its immaterial to this discussion. We love Rari team and why we are holders.

And Tribe is not even 1x. Has zero goodwill and trust. Joey has been desperately trying to find partnerships with other defi protocols to somehow find some use for FEI.

In your previous post, you also mentioned that both Rari and Fei are finding PMF. Well i find this a crazy statement. If Rari is 7/10 in terms of path to finding PMF, then FEI is 0/10. Rari is actually used and is useful. Fuse pools have been a godesend for so many people and has created more opportunities for liquidity providers.

FEI is not useful. Tribe was a money grab.

So what does TRIBE/FEI have to offer other than a bloated treasury (and mind you that treasury is blotted for a reason - cause Joey in his infinite greed decided to not use the treasury funds to back FEI price and forced lot of holders to exit at great losses). Obviously the community is not gonna forget. A few might, but a majority of us know what they did.

Tbh there is so many things wrong with this proposal that it's hard to put everything in one post.

The buyout/merger is being paid in FEI token, not cash. Like AOL acquired a much bigger Time Warner with there inflated shares. That merger is among the largest destruction of shareholder value in history.

And all this with zero premium to Rari!! Sadly I can only laugh at the audacity of this proposal.

unicorn

why not a new name from merging both, with a new token, and agree to swap both TRIBE and RGT for the new token?

helloshreyas

Out of all the DAO alliance proposals I have seen, this is one of the most thoughtful that makes sense for both communities. This could be a seminal moment in DAO-to-DAO economic activity.

For background - I'm Shreyas from Llama. Llama has a community of DeFi contributors who have created detailed treasury proposals, analytics dashboards, financial reports, led grants programs and designed liquidity incentives for projects such as Aave, Uniswap, Gitcoin, PoolTogether, Index Coop, Radicle, FWB, Harvest Finance and ARCx.

Structure of the merger

Joey and Jai left room for the community to give feedback on how the pricing should be modeled and the hack repayment conducted. Llama would love to work on a pricing model that ensures long-term alignment and most accurately captures the exchange rate between TRIBE and RGT. While we are still working on this, we wanted to indicate our interest early on.

Does the merger make sense?

We believe a correctly structured merger between Fei and Rari will be a positive sum outcome for both communities and the entire DAO ecosystem. By deepening the relationship with Rari, FEI can further cement itself as the stablecoin for DAOs. Fei will be the default source of liquidity for DAOs looking to provide borrowing against their native tokens. Rari's Fuse pools can benefit from bootstrapping initial liquidity and ensuring manipulation resistent oracles for long-tail assets. Fei can become the unit of account for manipulation resistant oracles due to the capital efficient nature of the Fei/Ondo product. We expect the shared roadmap to only become more exciting from here as the protocols break down barriers between each other.

daochemist

helloshreyas There is no pricing that remedies getting diluted and tying the fate of Rari with that of Tribe. Most $RARI holders are NOT $TRIBE holders, why would want to accept to become token holders of a project we don't care about? We now have to embrace the vision that $FEI will somehow magically triumph over $UDSC, $USDT, $DAI, $UST, $FRAX, $MIM, etc?

Why? what is the compelling argument besides TRIBE got a massive treasury?

This is seminal moment for VCs being able to will DAOs to do what they are used to do in tradfi. There is no good reason for a merger over a partnership. DeFi money legos are composable, that is the whole point of building moeny legos, they plug-in into each other nicely and are neutral to allow any builder (in this case any stables) to use them as they see fit.

How is this tight coupling i.e banking on one stable fitting the ethos of building neutral money legos? Hey Circle, why don't come build on top of our TRIBE protocol to help us grow the $FEI ecosystem?

This proposal is the end of Rari, y'all want to sell it as some sort of panacea for the space? So the all time y'all been dreaming of doing just like your tradfi idols, cuz M&A do so great for the economy and for competition? Let's build something big and massive that will crush the competition? 😆

This is indeed a seminal moment, when #defi becomes the same as #tradfi, when VCs get their wish, when diluting holders is celebrating, when money legos want to become too big too fail. Seminal because y'all lost you damn minds.