Hi all, this is Dan Elitzer, founder of Nascent. Nascent was the lead investor of Fei Labs' pre-seed round and we are also a significant holder of RGT, most of which we farmed and held because I had met Jai and Jack and thought that the project was immensely undervalued at that time ($<10M FDV) given the strength of the team. There are likely only one or two other people or entities outside of the projects' core contributors with as much to gain (or lose) if this merger goes through.
Despite being close to both teams, I only learned about the potential of this proposal being made a few days before it was made public and was informed in the capacity of "we're planning to do this; if you have strong objections, please let us know ASAP." (Note: Nascent has not traded RGT or TRIBE since I learned of the possibility of this proposal and I have never personally held either asset outside of Nascent.) My initial response was extremely enthusiastic and after further consideration, I strongly support moving forward. Even before learning of this proposal, these were the two protocols/teams I’ve been most excited about over the past few months because of how they are executing and how much potential I see ahead of them. They are both highly collaborative and I believe this merger would supercharge both their creativity and their ability to execute on extremely ambitious roadmaps.
What Rari gets
The near- and medium-term roadmap for Rari is just nuts, with v2 Vaults, improvements to Fuse, Nova, Tanks, etc. In my view, growth is hindered by lack of a meaningful treasury and the community’s reluctance to commit to meaningful liquidity mining rewards that could supercharge growth. Access to Fei’s massive TRIBE treasury, plus the ability to utilize PCV to help bootstrap new product offerings, immediately makes it significantly easier to get the flywheel going.
The main risk to Rari is that merging with Fei harms the credible neutrality of Fuse and other protocols, causing other stablecoin projects to be less likely to continue to partner closely. That said, there has been much more collaboration among the new breed of stablecoins than I expected, so it’s not as big of a concern for me at this point as it would seem at first glance.
What Fei gets
As mentioned, the potential of Rari’s protocols is absolutely massive and tight integration is likely to be helpful in growing natural demand for FEI across the DeFi ecosystem. For me though, this is largely about the strength and creativity of the Rari Capital core contributors - they bring a technical depth and level of energy that is hard to match. Bringing that into close collaboration with the Fei Labs team and broader Tribe community is something that I expect will unleash even more rapid and aggressive development of Fei.
The biggest risk I see to Fei is that this merger could lead to a lack of focus. The opportunity in front of Fei, to build the dominant DeFi-native stablecoin, is absolutely massive on its own. While I do think the Rari suite of products will be helpful in achieving this potential, it will be crucial to avoid shiny-object syndrome.
While the exact mechanism for the exchange rate is worth discussion, I hope the communities don’t get too bogged down with this and end up missing the forest for the trees. If you look in both forums, you’ll see quite a few posts indicating that each community feels their own token is currently undervalued and the other is overvalued. That makes sense: everyone is much more likely to hold a significant amount of a token they believe is undervalued and believe in a framework for valuation that puts that project in a very positive light.
The core challenge here is that most Fei community members view TRIBE as a value play (it currently trades either slightly above or slightly below book value, depending on how you calculate it), whereas most Rari community members view RGT as a growth play. I happen to be interested in the growth potential for both, but that doesn’t seem to be the sentiment I’ve seen reflected in forum posts thus far. Given this disconnect in views of valuation, it makes sense that there would need to be further refinement to the exact price/mechanisms to get everyone comfortable with the merger.
The proposal by @"GFX"#466 seems like it is getting to a better place on the valuation front, and I especially like the addition of the ragequit mechanism. (The 3M TRIBE compensation feels aggressive for just the work put towards the merger, but I’m a big fan of Getty/GFX and their work in other communities, so I’d be comfortable with it if accompanied by a 2-3 year vest and commitment to be an active ongoing governance participant.) Good points are made by @"CometShock"#189 https://twitter.com/CometShock/status/1465467269958537223 about a reasonable adjustment to the timing on the 7-day TWAP.
Calling back to an earlier point: “There are likely only one or two other people or entities outside of the projects' core contributors with as much to gain (or lose) [as Nascent] if this merger goes through.” The core contributors to Fei Protocol and Rari Capital have the most at stake here, both in both financial terms and in terms of what it will mean for how their time and energy is spent in the coming years. My understanding is that Joey and Jai confirmed the strong support of their teams before publicly making this proposal. To me, this is the strongest case for tokenholders to support this merger: the people with the most at stake and who spend the most time contributing to these projects strongly believe that this is the right thing to do. If you don’t trust the judgement of each team that has independently concluded this is the path that is most likely to lead to the greatest long-term success for their projects, I’m not sure why you’re holding these tokens in the first place. That’s not to say that we shouldn’t ask critical questions, refine the exact terms, try to get as many members of each community excited (or at least comfortable) with the proposal; I’m just suggesting that in the absence of strong rationale for why each project is better off in an independent state, we should default going along with the desire to merge expressed by the founders and core contributors of each project.
Cross posting to Tribe forum as well