Name: APY Plan, when Wmemo price rises APY reduces
Plan: Add this phased out APY Reduction plan to the mature proposals the community is examining as a way forward for Wonderland. WONDERLAND 2.0, Professors Plan, Bastion Trading.
Link to previous [DAO Discussion]: [“[DAO Discussion] - Restore intrinsic value to Wmemo and Wonderland asset (with poll)
Objective: Present a phased in APY reduction plan that benefits the community through eventual elimination of APY incentivized by price movement.
High Level Overview: The Olympus protocol model is not the first to use massive APY as a marketing gimmick. Liquidity Pools have generated interest in staking to pools for years through providing initial high APY that only gets reduced as more liquidity from participation pours into the LP. Olympus pioneered protocol owned liquidity in which the protocol itself mainly the treasury attains 100% of the capture of the funds that pour into the LP. The idea was to eliminate mercenary capital from the equation, as participants exit the LP, the protocol itself isn’t affected as the protocol owns the money in the LP, the only loser is the LP participants. As the LP loses value from lack of interest, the only loser is those that remain in the LP. Should the protocol not have a future plan for these funds, holders of the token are left with a worthless token while the protocol developers have a rich treasury of funds. The model of high APY for participation is nothing new.
The Olympus model did not solve mercenary capital, instead it made the problem into an addiction like heroine. Now, helpless individuals hop from protocol to protocol chasing the highest APY only to dump the devalued tokens on those remaining in the prisoners dilemma. The first out achieve the APY promise while those left holding only hope the developers have a plan. (Devs do something!) APY is now heroine, if one OHM Fork doesn’t provide the best short term APY then the masses will simply hop to the next fork offering the short term dream. You cant remove the heroine from the junkie by decree of APY cut; every time Olympus performs a framework reduction value drops - its a combination of sentiment, market conditions and competition - nevertheless the result has been the same, value drops. Recently Hector DAO performed an APY reduction and value dropped from $52 to as low as $10. As of this righting the price is now sitting at $24.
The problem with cutting the APY by decree is their is always a new fork waiting to capture the disgruntled. APY cuts by decree kill new address growth and only those with a significant balance of the asset already have any gain to achieve from APY cuts. This is why the capital flight happens. Cut gets announced, flight happens. Those without a significant balance are now trapped below initial entry value. Meanwhile the exited capital is now staking on the “next OHM Fork that marketed high APY”. Predictable because it happens every time.
Solution Those like me that study and examine this know when a protocol starts discussing APY reduction that is the perfect time to exit and wait for the lower entry. The APY cut cannot be punitive it has to be incentivized. So how do we incentivize it? Based the APY on the increase/decrease of price.
At 0K - 49,999 Wmemo then APY = 35,000%
At 50k - 59,999 Wmemo then APY = 30,000%
At 60k - 69,999 Wmemo then APY = 20,000%
At 70k - 79,999 Wmemo then APY = 15,000%
At 80k - 89,999 Wmemo then APY = 10,000%
At 90k - 99,999 Wmemo then APY = 7500%
At 100k - 109,999 Wmemo then APY = 5000%
At 110k - 119,999 Wmemo then APY = 2500%
At 120K - 129,999 Wmemo then APY = 1000%
At 130K - 139,999 Wmemo then APY = 500%
At 140K - 149,999 Wmemo then APY = 250%
At 150K - 159,999 Wmemo then APY = 200%
At 160K - 169,999 Wmemo then APY = 100%
At 170K - 179,999 Wmemo then APY = 50%
At 180K - 200K Wmemo then APY = 10%
Above 200K Wmemo APY is phased down to zero
All levels are examples, the DAO would vote in all the levels for APY reduction and increase.
Revenue Share: Simultaneously we offer revenue share so that intrinsic value of Wmemo increases faster. The faster we step through the Wmemo price levels the sooner we can achieve APY zero with no penalty to growth.
Backing Price support previously i was against but a good argument was made that i read that recently changed my opinion. I believe we can support the backing price in two ways; first thru burning all liquidated event tokens. Second, all tokens purchased to support backing price should be immediately burned. This would put pressure on the entry price for any dumpers of the token trying to take advantage of the backing price. The backing price should become foundational and voted on by the Dao in order to prevent repeated attempts at manipulators trying to take advantage of the backing price. This would set the backing price as bedrock and the burn of the tokens will take the price of Wmemo well above that range.
Token Burn We should burn all liquidated tokens after stabilizing Wmemo in a range in order to boost the value of the asset. Best conditions for this burn event should be after Wmemo has consolidated in a range for 7 days with an upward trend bias.
Closing Argument and supporting example The benefit is as the price of Wmemo goes up the APY goes down. Those that hunt APY are not going to leave a protocol if the APY is going down while price goes up. The individual sees the value their tokens are gaining while seeing the protocol become deflationary simultaneously. The turns the theory from “The prisoners Dilemma” to a value interpretation. This removes the Ponzi economics, those that hold the asset through the price gains are also seeing their tokens become scarce simultaneously thereby making their tokens more valuable long term.
There are protocols that have benefitted from low APY, but these protocols have started with low sustainable APY. As a result their price has been with a stable predictable range and has achieved excellent protocol stability and growth. Atlas USV Universal Store of Value on Polygon is the best example with over a billion in market cap while having only 108 addresses! APY has been roughly 169% from the beginning, however because it never promised unsustainable APY it has never had value flight. It does not use the Olympus Prisoners Dilemma model it uses NETD Nash Equilibrium Token Defense. I have studied this protocol for weeks and even in the most recent market condition this protocol suffered less then a 2% value loss.
The marketing gimmick of high APY was just that a marketing gimmick. Anyone that thought they would receive 1 bazillion dollars in 365 days should seek appropriate counseling because in order to facilitate that goal the token would have to achieve the market cap of the entire global financial system and even then it would not be enough. My solution will keep the value flight from occurring when APY reduces by tying APY reduction to price increase, this has not been done yet in any OHM Fork, let Wonderland be the first to test this theory!
**Explaination of NETD Nash Equilibrium ** Overall Strategy (NETD) - Atlas USV
Business and/or technical requirements of the implementation of the proposal:
Change the output of APY from a staking model to a price gain/retraction model
I would like to see this added either to any of the existing proposals or actioned on separately as its own separate snapshot. I dont care about taking credit, i just want the protocol to have long term sustainable health and viability. As long as you promote the agenda and the vision of this proposal you can take the plan and call it your own if your megaphone is bigger then mine and it gets eyes on this.
- Agree with this plan, make a part of any of the mature final proposals being considered, or make its own separate proposal
- Disagree with this proposal