- Explore options for Wonderland to operate independently.
- Continue to explore merger option
- Make No Changes
Name: [RFC] - Alternate Proposal to Merger
Scope: A proposal to merge Wonderland and Abracadabra has been made in response to recent price action that has resulted in another round of cascade liquidations and the difficulty of sustaining/implementing treasury backed buybacks. This RFC seeks to find alternate solutions that can lead to the continued, independent, operation of Wonderland.
Link to previous [DAO Discussion]: “[DAO Discussion] - Your Title Here”
Objective: The goal is to explore alternatives to a merger with Abracadabra. These alternatives are meant to preserve the original vision of Wonderland while addressing key issues that have contributed to the unusual recent price action that has negatively impacted stakeholders.
Provide a High Level Overview: It has been made clear that the Wonderland is meant to operate as a SPAC. As such, it’s true value lies in the ability of the treasury manager to grow the treasury through investments and then share those profits with stakeholders. Despite recent events, this core principal remains true and the long term vision can be realized by making some key changes to the way Wonderland operates moving forward.
The most pressing issues that need to be addressed for Wonderland to continue moving forward as an independent entity in the Frog Nation ecosystem are as follows:
1) The elimination of treasury backed buybacks moving forward.
2) An end to the rebase system to prevent further confusion
3) An opportunity for those frogs who cannot accept the changes to Wonderland to exit their positions at a wMemo equivalent of the wMemo backing price of $40,000/wMemo. (This is based on the valuation given wMemo on the merger proposal)
4) An opportunity for those who borrowed against their collateral under the guise of being protected by soft floor of the treasury buybacks an opportunity to repay their loan positions at the same wMemo valuation stated above. Repayment is optional, but this option is only available until a specified date.
5) Enhanced overall communication
6) Proposal to burn wMemo tokens purchased through buybacks.
Provide Low Level Details:
1. Elimination of Treasury Buybacks
The treasury backed price has been a staple of the Wonderland project. It likely contributed to the rapid rise of the treasury and also serves as a security blanket per se for the token holders en masse. Unfortunately, it appears this is one feature that will need to be eliminated in order to prevent price manipulation and protect the treasury from unnecessary expenditures.
The ability to utilize wMemo as collateral on Abracadabra is in and of itself a great benefit to all holders of wMemo. However, the existence of a treasury backed price has given a false sense of security to those who have chosen to borrow against their collateral. While it cannot be argued that buybacks have occurred, the truth of the matter is that the existence of buybacks cannot prevent rapid declines in price because bad actors can always find a way to manipulate the system resulting in liquidation cascades and a further price decline. Network congestion during these times extreme volatility can also cause buybacks to be inefficient and less effective than originally thought.
The true value for stakeholders lies in the revenue share model. In prior comments, It was stated that $2000/month per 1 wMemo is a realistic revenue share figure (This was when wMemo price was approx $55,000). Therefore, any short term negative price action for wMemo will result in an increased ROI for those that purchase the token at a discounted price.
Ex. A $2,000 revenue share/mo. on a wMemo token purchased at $25,000 represents a 96% ROI over 12 months
A $2,000 revenue share/mo on a wMemo toke purchased at $50,000 represents a 48% ROI over the same period
This will hold true as long as the treasury and revenue share function independently from the price action of wMemo. It will be more beneficial to let the market decide the price of wMemo and I believe that if the above numbers are an indication of realistic returns that the market will decide that wMemo is presently drastically undervalued. Even if prices remain depressed, holders/buyers will benefit from an increased ROI.
**2. Removal of rebase rewards / APY **
Rebase rewards for Memo holders is another staple of the Wonderland project. This system has led to a multitude of calculators and projections that seem to project an ability to make unrealistic returns. It is common, even now after the push to bring wMemo to the forefront, for some frogs to believe that Memo rebase rewards somehow represent an increase in the fiat value of their investment. In reality, rebases are stock splits that do not increase the fiat value of the investment in any way. Continuing to indulge this mistaken thought process with a wink and a nod instead of just providing a clear and concise explanation as to why these rebase rewards hold no real value simply leads to mass confusion, which is evident if you spend 5 minutes in the general or price sections of the Wonderland Discord. While token bias may exist, the fact is that the price of Memo will always appear to be in a long term decline and further confuses frogs and left unchecked reduces confidence in the project for no other reason than a misunderstanding of the fundamentals.
Allow frogs to exit Position at backing price
Some frogs may never be comfortable with the shift away from the rebase model and have no interest in continuing to support the project despite our best efforts to convince them of the very real profit potential that exists. I propose that they be allowed to exit their position at the equivalent value of their holdings with the backing price of $40,000. This opportunity will be made available until a specified date and time, after which it will be assumed that they want to continue with the project. I believe it is better to let these frogs go and hope that they continue to follow Wonderland so that they can later return with renewed confidence.
Abracadabra loan repayment at backing price
In the same spirit of allowing frogs to exit at backing price. We should allow any borrowers to pay back their loans at the Treasury backed price equivalent of wMemo. There was a very real sense of security when borrowing as long as the liquidation price was under the backing price. This point DOES NOT address those who have already been liquidated well under backing price. I will leave that determination to Sifu and Dani. However, those that still have open loans and were not liquidated should be given the chance to repay their loan at a wMemo equivalent of the backing price. This too will be made available for a limited time, and those that chose not to take advantage of this opportunity are then at the mercy of the markets.
Clear and concise communication is key. While Dani is very generous with their time and regularly host AMA’s on Twitter or in the Discord, the messages aren’t always clear and that be lead to misunderstandings. I’m not sure what an appropriate solution is to this, perhaps staff dedicated to public relations to ensure clear messaging.
wMemo Burn of tokens purchased during treasury buybacks
Business and/or technical requirements of the implementation of the proposal:
Present the requirements to implement the proposal.
Since an RFC is a “work in progress” Proposal, not all of these points need to be filled out from the beginning. They can be added over time as the RFC evolves into a mature Proposal.