Dear DeFi head manager,
Dear U.S. House Representative,
I am what they call a “fud bomb designed to eliminate all the bullnats let’s not sugar coat”.
The purpose of you here is to read a little story about a little capital raise. Get comfy.
I was sipping on my juice box just like on the usual Friday. I scroll twitter, I like American websites. My following list — terrible; sidechain thots, NFT pump and dumper collections. It’s a wild west out there. I scroll scroll scroll and there I see it.
A rewarding proposal was offered: deposit your Ether (ETH) to receive a USD pegged stablecoin called FEI, backed by the ETH collateral you deposited at start. While at it, get a $TRIBE airdrop of 20–30 percent of the ETH, proportional to the sum you pre-committed to convert to FEI. WOW. The more I would commit, the more free $TRIBE I would get!
Of course, I called both my daughters to help me invest in this, yet they refused me just as they did last time with bitcoin and butt-connect, despite me seeing these good things very early on.
So I had to just get another mortgage on the house & convert it to ETH. Pre-swap it, all good and ready. Worst off, I’d tokenize my debt and sell it through a notary & an NFT so that a whale can own my residence, too.
With the launch, $TRIBE token holders would be in control of the protocol with their $TRIBE airdrop allowing them a share of voting rights. Wooha, I would finally be able to vote — I know what an impact I have in my community and how much a vote matters. I also had the opportunity to purchase $TRIBE with their FEI, in a single direction (no swap backs). Also, the team has vested tokens, so I could make quite an impact. Hehe.
Alright, I’ll wait through the weekend and if no black cats pass by me, I’ll pre-swap a little bit to tribe too, “let’s dump on these normies”. At this end of this 3 day period of “genesis”, more than a billion dollars in ETH was accumulated. Should I still go in too? Well, did the mortgage anyhow, swapped to this eter beeplecoin already, might as well get security tenders soya can enjoy some tendies.
Andreessen Horowitz, Framework, Coinbase were behind as backers on the front page of the project. I thought it was a good opportunity to minimize risk in a new stablecoin I could govern together with other people. Ok. Let’s get my mulla back and make my daughters proud. I’m in.
A dark forest representation of what I would get myself into.
In the white paper & at the start, we were told that the protocol would be controlled for a few more weeks from start by the founder, Joey Santoro, so that if something would go wrong, he would take care of things. He raised more than he had planned. Like almost 5 times as much as the $250 million burger-coins he had set out to start to *gulp*.
Since the start (five or six days ago, time feels different in there), Joey has had more or less de facto full control over the money and everyone that tried to sell for the past 90% of the time would incur a burn or loss of value from peg on their FEI. This ranged from 20% at the start up to 100% of the FEI “stablecoin” on day three & even 150% on the fourth, meaning that you couldn’t sell at all on the FEI website. On the secondary market, FEI was trading at around 0.75 or 0.3 if people would use the “incentivized pool” of FEI-ETH to sell back from FEI to ETH at the price of 1USD=1FEI. The idea of a burning mechanism was to be expected, yet the magnitude of the system dynamics were perhaps not fully understood by the community, with burn durations lasting virtually all the time.
Since the start of the protocol, the stable coin has been under peg, with the team’s code directly punishing sellers on their site. Since days ago, this burn has been removed yet the pegging system has been left disabled, as the team are claiming a bug in their system. So far, roughly $200m worth of FEI managed to exit the so-called jail.
The protocol’s code was released several days prior to the start. We did read that this could happen. He designed a mechanism to “repeg it”. The way the mechanism works is to pull all the liquidity controlled ($950M at time of writing) & rebalance the quantity of Ether-Fei from the liquidity pool of uniswap (automated market maker) so that the price reaches a peg of one dollar.
On the 7th of April it was trading on the secondary market at 0.75USD while the protocols offered zero (%) ETH for any quantity of FEI that you would sell. Since the start of the protocol, the repegging happened on three separate occasions, with the first repegging to with a burn rate of 0% which lasted for 15 seconds, after which the burn rate skyrocketed to 10% within minutes and to 15–20% for most of the time.
I was desperate to escape. I just remembered how much I actually wuv vb and how important this ETH was. Not only my house, but France. After the second repeg, things started to get ugly. That took one more day of waiting to happen, I think.
After getting back to my hospital bed, I opened up my favorite discord server, where me and several thousand other investors would participate in conversations. One of my favorites surrounded not only the recycling of the protocol and dumping on VCs, but also funding private prisons in the US using the controlled value. Maybe I came up with both, FEI jail traumatic. I may also have some.. I forget.
Anyhow, on the 8th of April or so Joey disabled the burn and allowed people to exit after having kept them for a few days under the terms of the contract that they signed, and a golden ten minute opportunity showed itself, where a series of 8 reweights pegged for the first time FEI to the dollar & allowed roughly $200m in ETH to exit.
I was awake for it. Losing sleep was finally worth it. All the FUD I would spread would finally pay out. J needed me out.
Following, the repegging mechanism was disabled so that the protocol’s FEI would trade again under peg. According to the team, this is due to a bug which folks from Immunefi helped them discover.
If you would abstract jail time for retail & they could off the counter exit from start, I wouldn’t even be mad.
So, just to recap:
From 6th to 7th of April, the rate has been at more than 80% if one tried to sell back through their user interface website.
Since the 8th, the burn rate has been at more than 150%, so if one tried to sell back through their user interface the transaction would revert & they also lose around 150 dollars for the failed transaction fee.
Indeed, in the white paper, they mentioned that this may happen but that the money we put in initially (our ETH which he owns which he calls protocol controlled value — pcv) could [later] be used to repurchase FEI from the marketplace so that the value of FEI would stay pegged to 1 dollar. I guess we were not fully ready with the how soon the purchase-back would arrive, given post airdrop dumps scenarios (thx, blurred ;p), yet prepping for that is quite important for a good, fair process for all the stakeholders.
However, since the start of the protocol, the value of FEI has been under one dollar for the rough majority of the time.
Severely. Constantly. People have been asking for help, sending hundreds of messages, while hundreds others have been made about how this must stop and how users should get compensated for the expected-unexpected contract in which they have signed themselves into.
I started writing this to urge Joey to return all money back while he still has control over it, as he showed negligence so far, with genesis users incurring psychological & capital losses as they tried to stay or exit from their capital, with little communication or path forward from the majority voteholder team.
Fun fact, the airdropped token $TRIBE has been steadily decreasing in value since the start, except for a short spikes: if j posted announcements perhaps. I’d corroborate that with some proof, but the sauce is under an account that was banned from their discord due to either:
- calling a mod boomer using emojis,
- proposing the use of the PCV to fund private prisons in the United States with Naval and Horowitz as potential seed funds,
- or for adapting an Avril Lavigne song to create art about the topic (guess the song).
So yeah if you all folks want to seek some legal action — this is merely an idea — we could organize through the distribution of a token to each genesis address. Then, the addresses could organize through OtoCo in a DAO registered in Wyoming, for the purpose of seeking legal mediation to resolve, if there are, any and all outstanding issues, amicably.
This is more of a democratic way of assembling & setting the agenda compared to attempting to gather voting power on $TRIBE, as the team & investors hold 20% and the whole secondary market holds a total of 20% too. 40% of $TRIBE belongs to the DAO, while the remainder of the 10% is distributed over two years to FEI-TRIBE LP tokens on Uniswap. Thus, the team has already an edge over the community. That besides holding private keys to access almost a billion, of course.
Joey had the benevolence of stopping the tyrannical burn but they tell us that it will be enabled again.
“买了奖励 卖了惩罚 这个机制是不是有问题 奖励的可能是单个个体但是惩罚的永远是所有持有人” — Buy the reward, sell the penalty, is there a problem with this mechanism[?] The reward may be a single individual but the penalty is always all holders. Elros#7029
To gain access to vote power for the PCV money, people have to get $TRIBE, which was also the honey pot airdrop offer that brought folks over. His team, despite having “vested” $TRIBE tokens, can delegate all the 20%+ voting power from all their tokens, so they essentially have monopoly over all this money. They try to persuade people that the team’ 20% of TRIBE can’t directly be used for votes, as it requires them to also delegate the votes, taking an extra transaction.
Some regret having signed a contract, yet they really regretted the feeling of powerlessness & funds are not SAFU. They wanted out.
On the user interface, the system displayed predicted time ‘till repeg and what the burn rate is. This predicted time basically tells us for how long FEI couldn’t be sold without incurring losses of at least X(~25%) on the secondary market.
Three days ago, the losses were 150% on the FEI Labs site, so users could try to get prepared to compete in that potential ten second time window through the FeiRouter bots to get orders through at a good price.
The predicted time since start has been hours, while when our benevolent guardian j started to become involved in governance, he deemed the change of the parameters of the repegging mechanism as not an emergency.
With the second repeg there was a whopping extra 38 hours predicted till the next repeg, time in which folks would be “under peg” — unless the market would naturally correct itself. Both J & the market thought this was not an emergency & perhaps rightfully so (5th of april).
To try to get in that window, folks would have had to spend hundreds or thousands of dollars to bid for the chance to get their sale through at a good burn & price rate.
So,
- The $TRIBE governance token (majority vote-holders team+investors) along with J practically have control over the value of the wallet that holds a billion.
- So far, on chain governance offered was not usable for retail, as the interfaces created two days into the protocol started were buggy, not allowing people to propose votes as they would not detect the quantity of tokens in the user wallet or would quote amounts higher than the quantity of $TRIBE. In terms of governance proposals, despite people having lost hundreds of thousands to burnt FEI due to under peg sale, no improvement proposals have been voted & passed on.
- The current “best” proposal which vote-holders will vote on is to allow those that have not left FEI yet to either
- have them lose 10%
- leave at dollar peg value
- change nothing
It is cool to have the power to set an agenda, J. You got power sir. We respect your authority.
So, what happens with the extra money? $TRIBE decides. Would you call it stolen, would you call it legally signed off, IDK.
What are you thinking about? He tells us that the protocol didn’t fail. It is okay. You made you daughters proud. You got out. Why do you care? harm principle.
There is an open accessible ledger which shows a few hundred transactions of small wallets failing to sell or incurring high losses because the system was tweaked so people couldn’t exit for a few good days until J & VCs (majority vote-holders) figured out how to extract most money from the billie. Implicitly, not explicitly.
Was it the us versus them game that triggered me most? Perhaps, for them it was easy & profitable, for us it was shocking, risky & traumatic. For their system to work at low risks, people would have to accept losses & move on. The buying volume from outside investors was very low. It seems they did not have as much security in their mind that the price would repeg. I like risks tho. I don’t like fraud tho. That is how I managed to end up here.
It is publicly accessible to check that his or “our” pcv/wallet made more than two hundred million dollars due to people foregoing their ETH. They want to exit what they now believe is a scam since the protocol keeps at peg for a very short period of time & he does not offer any exits unless you indefinitely wait. Also, the VCs & team have majority vote power. So what is there to make others seem that this will not be a corporate bank abuse that attempts to go over the good will of US code legislators?
His earliest proposal was for us to accept that we lose 5% so that he lets us exit (“relieve sell pressure”). That was after already making tens of millions allowing 100% 1–1 redemption.
So Naval and Horowitz trusted their money to convince us to trust J with our money at the promise that later we could redeem at a dollar — POG.
Cool thing is that those who leave — leave their money behind. And those who stay — they theoretically make money from those that leave. This is if the protocol will indeed function & repeg to US dollar.
To corroborate that security, a rich friend of his, Robert Leshner, tells us on the public private investment forum of Discord, that he will buy any amount of $FEI at 70 cents, which is 5 cents less than current market price. He tells us that he does this as he expects the price of FEI to rise to one united states dollar.
Robert Leshner tells this to us as a “tribe elder”, a group of popular people from the crypto space which are present on the public community on Discord (private-public community chat, this one with around 3500 members). He is of great help for inexperienced investors to lose the littlest money they could out of this. He, as a higher member of the pyramid, literally tells them that he expects it to repeg [to the US dollar].
These “Tribe Elders”, like the “Story Tellers”, do show up high in the discord user interface.
Some users question the financial decisions of others, some provide reassurance, support, ways forward or they dump their emotions in the hope of change. Some others tell us that every person that gets out of this burnt is good for the $TRIBE holders.
Genesis users (mostly retail) purchased $TRIBE at 3.26 from their own money while after the dump it is now trading at 1.90, while $FEI was purchased with ETH for $1.01 per FEI, with it now around 0.85. This is due to the fact that some of that extra $TRIBE airdropped was dumped within the first seconds — perhaps to be expected.
I, too, wanted to dump on the normies. That’s what the creators enabled.
The more ETH you pre-commited to this, the more $TRIBE you would get. As such, some very wealthy folks sold for $35 million instantly & dumped it’s price, with FEI too. This, with the fact that normies purchase at 1.01 as it accumulated too much money for the safety of its’ pricing curve, sent the protocol is on a downward spiral. Joey refused to give funds. Also, fun fact, folks speculate that investors purchased $TRIBE it at 0.30 cents. The video in which the team is asked about the price at which seed investors purchased $TRIBE at has been taken down from twitch. Good move :P
I tipped the SEC, as they function with a limited liability company called Fei Labs. I was hoping that they could perhaps see if there is any legal channel through which I can get retail money back without selling to his investor friends or competing with bots. This is more or less the letter that I wrote to them.
At the time of writing, the hottest advanced proposal is to allow FEI users to exit at either full or discounted (0.90) price, so that $TRIBE holders (majority joey & VCs) can vote to make bank from this.
“On Saturday at 4:00pm PT, a signaling snapshot vote will occur regarding the above. To summarize, the 3 options will be $1 reserve stabilization, $0.90 reserve stabilization, and no change.”
https://tribe.fei.money/t/reserve-stabilization/1793
The mechanism of this proposal would withdraw 75% of the PCV (~350,000 ETH) to a contract which offers to buy outstanding FEI at the agreed upon price, 1 or .90, of ETH relative to the oracle price. If this buffer gets exhausted the Tribe community can instruct the Fei protocol can allocate more PCV in a subsequent proposal.
https://tribe.fei.money/t/reserve-stabilization/1793
If you’re from outside the community, I ask you, fellow human, to join that discord channel of Joey’s . It will require you to make a discord account, yet after that you can actively watch what happens over there and what types of protocol users there are there. You’ll be able to see the full history of the chat. If you’re there, feel free to ask for dingo, or ask why they got banned.
Here: https://discord.gg/vppVWp2h
While at it, feel grateful towards the security that your state provides to you. Take care of your money and *don’t trust, but verify*. I know I ought to do that more often.
I will release at least a meme a day till the SEC takes the FEI away.
When using we I refer to hydra.
