The major risk when LPing on an AMM is that the LP position becomes worthless if either of the tokens in it go to zero.
If FEI loses its peg and becomes worth close to $0, our LP position would then consist only of FEI, with all of the POOL being removed through arbitrage.
As such, it would be important to do due diligence on the FEI stability mechanism and how likely it is to de-peg. As it’s a relatively new stablecoin, I’d be very cautious here.
I have never looked into the stability mechanism of FEI myself. @bpm6867 Has the game theory of FEI been thoroughly studied? What oracles are used?
There have been a number of algorithmic stablecoins that have depegged horribly.
Most notably, IRON finance.
Assuming that everything works as advertised, this seems like a great deal to me.
The 3% fee should be greatly outweighed by the TRIBE subsidy.
One small thing worth noting is that having the majority of our liquidity on the POOL/FEI pair means that people trading from ETH will need to pay 0.6% in trading fees rather than 0.3% on a POOL/ETH pair.