Draft Proposal: FEI/FOX Token Swap

(Note: this draft proposal has been cross-posted on the TRIBE governance forum: [Proposal] FEI/FOX Token Swap - Proposals - Tribe)

This proposal advocates for swapping $2 million worth of FOX for $2 million worth of FEI–the native stablecoin of TRIBE, which consists of the newly-united FEI and RARI communities.

Here at ShapeShift we’re very familiar with both platforms, having already plugged into their unique capabilities. On Rari, our FOX Token is available in both the Tetranode Pool and our own “Fox and Frens” pool. We recently used Rari to borrow FEI in order to fund our December payroll. Additionally, we’re a proud partner in the FEI liquidity-as-a-service (Laas) program and are currently tapped into a steady stream of TRIBE rewards in exchange for providing FOX liquidity.

Looking ahead, we’re excited to collaborate even more closely with TRIBE. To provide just one example: our decentralized, open-source interface could help the TRIBE community connect with more users and offer them an improved experience by facilitating direct integrations with RARI pools. Similarly, the addition of FOX rewards to Rari pools could create a win-win for both projects; FOX would become more widely used and distributed, while simultaneously incentivizing greater use of Rari.

From a tokenomics and treasury management perspective, our top priority is to diversify a portion of our treasury–which primarily consists of FOX–into stablecoins. (The current state of the treasury, including most of our active DeFi positions, can be viewed here: 0x90a4…51be - Zapper.fi

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    Given our existing relationships with the FEI/Rari communities, we’ve identified a promising way to achieve a portion of that desired stablecoin exposure (while at the same time, deepening our current win-win relationship): a DAO-to-DAO swap of FOX Token for FEI.

    For ShapeShift, FEI’s price stability, vibrant community, expanding ecosystem, and RARI merger are highly desirable attributes. For FEI/RARI, potential benefits of this token swap include:

    Treasury diversification

  • Direct integration into the ShapeShift platform
  • The ability to vote on DAO proposals (FOX is ShapeShift’s governance token)
  • Exposure to ShapeShift’s various value-accrual mechanisms:
  • Revenue-sharing agreements with DeFi projects integrated into our platform, such as Yearn
  • Revenues generated from commissions from validators operated on behalf of the DAO
  • Revenues generated from allocating assets in the DAO’s treasury to DeFi strategies

Where we’re headed:

The roadmap for the ShapeShift DAO is ultimately driven by the community of FOX Token holders. Currently the community is aligned on–and rapidly progressing toward–the following mission and vision:

Vision: We envision a borderless financial system built on open, decentralized protocols.

Mission: We shall be the pathway into this borderless financial system; an open-source, multi-chain, self-custody crypto platform enabling billions to achieve financial sovereignty.

An early, in-progress version of the new ShapeShift is soft-launched at https://app.shapeshift.com, and we’re planning an official launch for January 17th, 2022. This version is open-source, supports multiple wallets, multiple blockchains (not limited to EVM-compatible networks), and is architected for complete decentralization.

The new ShapeShift, powered by a full open-source stack including HDWallet, Unchained, Chain Adapters, and Web repositories, will enable completely decentralized access to DeFi protocols across any chain. Additionally, the upcoming FOX Chain will provide backend node infrastructure for any interface that wants to be truly decentralized, including ShapeShift’s.

Finally, through integrations with DEX and DEX aggregator protocols such as 0x, THORChain, and Osmosis (in-progress), ShapeShift enables users to seamlessly move crypto assets across chains with no KYC, custody, nor added fees. With the understanding that both the decentralized interface and blockchain data infrastructure are imperative to bringing DeFi to the masses, the ShapeShift community is actively coordinating to build this.

What exactly does this proposal entail?

$2 million worth of FOX would be exchanged for $2 million worth of FEI. The price data used to determine the equivalent token quantities will be determined at a date and time that both DAO’s mutually agree upon in advance, with the Chainlink feed for the respective tokens providing the relevant price data. The two communities will mutually agree upon considering additional token swaps in the future, should this initial swap prove beneficial for TRIBE and ShapeShift.

In addition to executing its side of the DAO token swap, ShapeShift would commit to integrating Tribe products into its platform (initial discussions about this are already in the works), as well as adding FOX rewards to Rari pools.

Ultimately, we view this potential token swap as just one more building block for constructing a solid, enduring foundation of partnership and collaboration between both of these vibrant DAO’s. We look forward to joining TRIBE in helping to build a more inclusive, open, permissionless, and vibrant future.

In full support of this proposal, I would also support increasing the swap anywhere from 2 mil all the way up to 10mil if the tribe and ShapeShift communities were for it!

The only concerns I have of a 10 million dollar swap is that the amount of voting power they would acquire and any sort of potential governance concerns that could arise from this.

It’s a fair point, but I think that shows how much we want to partner with the tribe DAO and our will to collaborate with them. Them having significant governance power by no means would mean they control the vote, only have significant influence.

I personally would be fine with even that amount, I think the tribe community would prove to be a responsible member of our community governance wise, but really my point is “up to 10 mil”, somewhere in between 2 and 10 would also have my support.

I support this too. I would also support raising the swap up to $10M.

Would we possibly use some of the FEI for payroll? Or is the idea that we would keep it in the treasury? Seems like it could be well put to use as a stable for pay - or trade for USDC for payroll.

I think what to do with it is a TMDC question, but yes in theory any stable could be used for payroll (or swapped to usdc as needed).

Given that we aren’t adequately diversified into stables at the moment, my first inclination would be to hodl most of this FEI in our treasury and find other avenues for payroll. (If we relied on this FEI for payroll, it would be exhausted in less than four months). That logic might change if we start to approximate our goal of having $10 milllion stashed away for the proverbial rainy day.

Also, FEI is very invaluable as a long-term treasury hold thanks to its different risk profile relative to USDC and other stables.

Yes, I agree with the above. A proper mix of centralized and decentralized stables seems a safe choice.