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?
What do FEI and Rari both need?
- Product market fit
- 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?