The Tally Newsletter, Issue 29
April 28, 2021
Welcome back for issue 29 of the Tally Newsletter, a publication focused on all things decentralized governance. We’ll keep you updated on key proposals, procedural changes, newly launched voting systems, shifting power dynamics, and anything else you need to know to be an informed citizen.
This week we cover:
B.Protocol’s activation of token governance
TRIBE holders’ inaugural vote to support FEI token price
Plus brief updates from around the ecosystem.
B.Protocol Users Approve BPRO Token
TL;DR: Users of B.Protocol’s MakerDAO and Compound backstop products independently voted to transition to a joint governance token.
B.Protocol users have just completed an inaugural vote to adopt token based governance. While the current bull market creates obvious incentives for tokenization to allow users to cash out, B.Protocol’s path to token governance has been unique among recently launched protocols.
Since the launch of the protocol last fall, B.Protocol users have accumulated user scores based upon their time within the protocol and capital committed. But with MakerDAO and Compound borrowing positions supported through separate infrastructure, there was no clear way for the genesis team to allocate points between the two groups. Instead, user scores were allocated separately based on the underlying protocol being users, creating two separate B.Protocol user groups.
With the initial launch period coming to a close, the two user groups faced the daunting task of integrating their scores into a unified community. But in the end this process proved to be fairly uncontentious. After establishing consensus support for tokenized governance with separate snapshot polls, both groups debated the appropriate relative weightings for Compound and Maker users.
There were several tradeoffs to consider when determining weighting, as Compound had higher usage but MakerDAO users had been participating with B.Protocol for a longer time period. In the end a 50/50 allocation was adopted in the interest of simplicity and building consensus.
With the final vote passed by an absolute majority of both user groups (likely the highest quorum required of any proposal to date), B.Protocol will launch its BPRO governance token and on chain governance within the next day. And the decision to base governance on the Compound governor framework will allow Tally to support B.Protocol voting and delegation from day one.
Fei Protocol Votes on Stabilization Plan
TL;DR: Proposers hope to stabilize FEI price closer to $1 by increasing holder incentives and offering a fixed price buyback program.
Since Fei’s genesis launch, the price of the FEI token has languished far below its $1 target price. This was partly intended by design, as Fei uses direct incentives which penalize selling below $1 in the short term to support longer term stability. But a few bumps in the road have compelled Fei protocol voters to pursue an alternative response to persistent underpricing.
The protocol was designed to slowly buy back FEI from the market when it was underpriced through direct incentives and periodic re-weights to the protocol controlled value (FEI and ETH tokens) in the Uniswap pool. But with technical issues forcing these mechanisms to be disabled, there was no longer any mechanism forcing FEI price back up to $1, leading to a drop in confidence and FEI price dipping as low as $0.70 in some moments.
The current governance proposal seeks to address this persistent loss of peg through interrelated supply and demand incentives. First, the protocol would offer buybacks of FEI at $0.95 worth of ETH in order to reduce excess token supply without excessive depletion of protocol assets. In addition, the proposal would increase incentives for depositing to the TRIBE-FEI liquidity pool, which increases passive demand for the FEI token.
Data via https://www.withtally.com/governance/fei/proposal/1
While the vote has proven to be fairly controversial with some concerned the protocol is paying out too much, “yes” voters have a comfortable lead and the proposal is on track to pass later today. Confidence seems to be returning for FEI holders as well, with the token price rising from a low of $0.80 earlier this week to over $0.91 at time of writing.
In Brief:
Aave votes to offer liquidity incentives for key v2 markets:
MakerDAO avoids losses on high leverage $17 million ETH liquidation:
Inverse Finance begins vote to close on Tonic Finance acquisition:
Crypto users rally around donation drive supporting Indian COVID relief:
Compound queues proposal 44 to continue deprecation of REP and legacy WBTC markets, in their first vote to include a proposal delay period:
Thanks for joining us for issue 29 of the Tally Newsletter! Be sure to check out the Tally governance app, join us on Discord, and subscribe to our protocol calendar for the latest updates!
Anything we missed? New developments or protocols you’d like to see covered? Drop us a line at newsletter@withtally.com
Best,
Nate, Tally