Add to this that those millions of BSGG got dumped before the average wMemo holder got to sell, which means everyone else got a price that was already dumped. So the question remains, though sarcastic, who exactly did it benefit to include BSGG, the frogs or the few whales?
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Great explanation Carlo!
I see two different problems, and I think it is wise to address them separately when decisions are to be made.
Probem 1: The dump of BSGG
I think we agree that providing BSGG en masse to retail is a scenario where we can expect ‘The Dump’, which we want to prevent. There is only one way to prevent this, and that is to provide stable coins in stead of BSGG at redemption event.
We should adapt the redemption proposal to: BSGG (and other illiquid tokens) are included in the redemption price for their current USDC value minus a 10% discount.
We can just keep the BSGG in our treasury. It is not strictly necessary to use a proportionate amount of every single part of the treasury to fund redemption. Curious if some people here disagree with that. The 10% discount is used to mitigate the risk of WL of holding the asset, and to strengthen the treasury for remaining holders.
Note that ~27% of WL redeemed last time - from memory, correct me if I’m wrong
If - for some reason - we’d want to get rid of some of the BSGG in the treasury, we could do that via preferably an otc deal, or alternatively via revenue sharing. But these actions are a TM responsibility, strictly separate from the redemption proposal.
Then lets make this fair then, we can accelerate the distribution of BSGG to farmers - by increasing this to double of the current distribution. 40 million * 10 weeks… will rapidly drop the holding greatly.
Then by the point of next redemption, the amount to be argued would be even less. Only a third to half of the previous amount.
I am happy for anyone in the community to approach Betswap to see if they want to re-purchase BSGG at a materially low price, and with discount with say that exact discount mentioned - at 10%. It really depends on whether they prefer to hold on precious treasury funds (which I would professionally recommend them) or to repurchase back for the sake of price stability.
Ultimately, no protocol is built for the benefit of small speculator (“Frog”). Whether it is gas fees, borrowing protocols with in hindsight punitive liquidation procedures, fomo-scare piling on tactics, the odds are stacked not to their favor.
The results are simple, had you redeemed, even sold BSGG at 0.005 levels, and bought back wMEMO, you’d have the same amount of wMEMO in your wallet, and some extra cash left over. That would have been uniform for every wMEMO holder who chose to redeem. The team, and especially myself was particularly adamant on the benefits of redemptions. If they were not heard, then too bad.
@SkyHopper
I’d support redistributing BSGG via revenue sharing.
If I understand you correctly SkyH: The argument here is that there is 50-66% less BSGG to redistribute via redemption, and therefore the price impact is also considerably less.
Then: Why not rev share all of it over a 6-9 month period? Assets allocated to rev share are not included in quarterly redemption so the problem fades. The discussion will probably continue, even if it is about 33-50% of BSGG.
Regarding problem 2: Asset allocation
The goal and mindset of the quarterly redemption is that users will get the option to exit the project at backing price, without a discount/punishment.
Semi-liquid tokens (SIFU) are undisputedly part of the backing, illiquid or vested. The topic suggests that a portion of semi-liquid assets (SIFU) should be included in backing price calculation. I’m not sure whether excluding a significant part of the treasury this way is in line with the original intentions of the quarterly redemption proposal.
I’d suggest to take a similar approach to what was stated above: Include USDC-equivalent of illiquid assets (SIFU) allocation in backing calculations, but apply a safe ~10% discount to protect WL treasury.
This solves liteally all mentioned issues in the topic’s introduction:
- Increasing the amount of VC assets being released/dumped hurting price action even more.
- Unclear redemption price/assets beforehand.
- The less redeemers the more they get… Last redemption, if only one person would have redeemed, they would have been eligible for 329m BSGG tokens (worth about 6.6 million USD at the beginning of redemption).
- Goes against the narrative that 1 wMEMO is worth a certain amount/percentage of treasury assets.
Keep in mind that nothing I proposed even need to be voted on. All these things can already be done under WIP 9.
The only reason this is even a discussion is because our Treasury Manager decided to use his “TM discretion” instead of following the intend of the proposal. Therefore, here I am trying to make sure that the intent of the proposal is more explicit of leaving room to “TM discretion” where there is no need to be.
The current WIP technically does not need to be adapted for this. It gives discretion to the TM to include from 0 to 25% of VC assets as part of the redemption price, but it does not say that they need to be distributed as is. Just like we would liquidate some BTC, we could liquidate 0 to 25% of the BSGG for the redemption. Or like you’ve mentioned, we can keep the BSGG and liquidate something else to get the same value for redemption.
It has nothing to do about whales vs frogs. If the whales would have sold last, they still would have been affect by the frogs dumping, just less. The goal of redemption is to give a certain value in exchange for the wMEMO. By allowing an asset to be dumped like this, it means the value we are giving back could be inflated.
The 329m BSGG used was worth 6.5m pre-redemption and only about 1.7m post-redemption. Whether it frogs or whales, that fact is people ended up with less value that they could have had because of how redemption was done.
I’m not sure if I’m understanding what you mean properly, but the intent has always been to use liquid backing. So locked tokens would be excluded regardless. This is something that should have been considered when voting the SV investment. Voters chose to agree and lock the 25m for a year.
The main point of concern was the amount of “vc assets” to be allocated as these were understood to be for the long term. Therefore, to find a middle ground, the TM was given discretion to allocate 0 to 25% of the available assets to add to the redemption price.
As for the revenue sharing, the amount has always been up to the TM discretion and while can be used to address the issue, if I remember correctly, the left over of the 400m meant to be revshared were included in the calculation of how much BSGG was available to be redeemed. However, @TheSkyHopper may be able to confirm otherwise.
That being said, revenue share is a whole different topic altogether.
Ok, so lets get back to the root of the matter on the previous WIP, that given the time frame was written a bit too much was left to the Treasury Manager when some view it from hindsight.
It isn’t generally wise to leave things to discretion when they don’t require it, or to narrow the range of discretion. Therefore, going forward, this proposal is looking to further specify and classify parts of the assets for redemption and in what matter they would be distributed. The faster these items can be cleared, then market pricing for wMEMO may simply correct itself to the right levels over time with less left to guesswork.
We should deviate from “VC” term, and only specify Liquid and illiquid as I’ve written before, and how they would be treated in a redemption process. And how assets are discounted if they qualify as “illiquid” class of assets.
I am in agreement with @AvocadoInvestor . If the position of Wonderland is that it wants to distribute all BSGG holdings, then I am in favor of increasing farming rewards until all BSGG has been distributed.
How long are quarterly redemptions going to happen 24-36 months?? This is actually a question as I don’t know the answer. Simply increase farming rewards over the same time frame and exclude BSGG from the redemptions.
Yes @TheSkyHopper the small investor will always be at a disadvantage. Most of us are well aware of this fact. However, Wonderland was supposed to be the place where the scales were tipped a little bit more in the favor of the small investor.
Redemptions as a whole are not the issue, and anyone that redeemed would have benefitted even if BSGG were excluded. Which is my entire point, only a select few truly realized a financial gain from BSGG inclusion in and of itself.
Now, if we’re talking about fairness and we’re not going to distribute BSGG entirely as farming rewards, then come redemption time why not simply airdrop ALL wMemo holders their just due in BSGG.
If I’m not mistaken only about a quarter of holders even participated in the redemption to begin with. Why exclude holders that have lost touch with the community and don’t know what’s going on? Or simply chose not to participate in redemption? They’re stakeholders all the same.
Keep redemptions and let those that are active in the community and know what’s going on take advantage of those arb opportunities, but exclude BSGG and find a better, fairer way to distribute holdings so that ALL stakeholders benefit.
There are 55,000 separate addresses holding wMEMO alone. This is simply not feasible.
So, let me increase farming rewards by another notch for the following week (by the way is my last time) to nearly double the reward.
Every holder has the option of engaging in the community (i mean at the very least reading about announcements) - and this creates value unto itself. A DAO with a vast majority of people who are mostly out of touch community is worthless. No one is barred from staking their wMEMO in the pool.
I think to have certain protocols that have active members like Sifu in itself tips the scale for the small investor, where alpha is shared and the chance of a treasury that was overseen by a crypto genius workaholic, an ex hedge fund manager, and now likely soon to be a Wharton graduated ex PE manager / Defi guy. That is/was the edge.
The edge was also to be that the strong large community can muscle its way into favourable pre-token SAFT deals. But this never really materialized either.
What you hope is that improvements along the way lessen the investor activity to redeem, that is day to day operational fundamentals of this DAO. But this has been a significant challenge as you may have observed. We’re getting there though!
A 10% fee was widely unpopular, and often referred to as a form of “rug” by the community. I tried to avoid a fee on this redemption for that reason, amongst others. I think the best option here, and I’ve mentioned this before, is to distribute more via the farm where it seems more equitable for holders and helps us avoid these timed whale dumps. Another options include negotiations with betswap for OTC sales. We have to ask ourselves, when we are at the point where we are selling at or close to cost basis, does it make sense to continue to give these tokens away en masse and drop the price further? Or does it make more sense to hold some of these tokens while they launch and wait a few short months. I think we should revert back to the original intent of my WIP which is each holder is eligible for their share of BSGG (backing per wMemo) up to 25%, not 25% of the entire circulating supply. Using this method, we would have avoided a large % of the the ensuing dump in BSGG price, since the average redeemer would have received roughly a quarter of the amount of BSGG. You have to ask yourself, if most holders are losing out on the price crash from 2 or 3 giant whales, who is really getting “rugged” here? I would argue its the vast majority of holders and small frogs. Sometimes less is more.
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I say put it all in the farm and reward holders that way. If you can add a few more tokens like this you may actualy have something that can replace the rebases.
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Then as a proposed text: Illiquid tokens are included in the calculation of backing for 25% of their value per wMEMO. It is up to the TM to decide or to pay out in USDC or to redistribute the illiquid token itself.
What do you think of this?
@NalX - I meant to say I believe it is more fair to include SIFU tokens in the backing price for redemption.
The redemption idea has always been to provide holders an exit at backing, not with a discount to that since community would consider that ‘stealing’.
The term ‘liquid backing’ is constructed because of the VC investment in BSGG. Each investor understands that when releasing such VC raised token at once prices will plummet. $SIFU tokens are a completely different ball park. SIFU is IAAS (investment As A Service), and the token is backed by the investement. The price can deviate somewhat from backing, but it’s not the difficult to value VC investment, i.e. the reason why we called BSGG illiquid and not a part of backing.
The argument that this is considered when voting for the SIFU investment I believe is a tricky one, since public communication did not mention that SIFU was going to be excluded from redemption value.
There seems to be confusion around illiquid tokens and what is referred to as VC assets in the redemption WIP.
The term liquid backing has not been constructed because of BSGG, the terms “VC assets” and “redemption price” has. Liquid backing is a pretty common term used by other protocols as far as I know.
BSGG, for the most part, is NOT considered illiquid. In fact, the majority of the BSGG is liquid. The reason why all of it is not included is because they fall under the “VC asset” clause. That clause was meant for Wonderland to be able to keep assets meant to be kept long term without having to liquidate them. This also has the benefice of increasing backing for holders. However, there might not always be VC assets, therefore when there are no “long term plan assets”, people are able to leave at liquid backing.
The SIFU tokens however, does not fall under the VC asset clause. The value of the vested portion of the token will be part of the of the redemption price. BSGG and illiquid tokens (e. g. unvested SIFU) not being included are for two different reasons.
Once again, the goal of this proposal is not to change how the redemption process is currently working, but rather to provide better guidelines to the treasury manager to limit discretionary power that was not meant to exist.
What you are suggesting here would be a change of what is included in the redemption price given that all illiquid assets are currently meant to be excluded.
Nothing tricky about it. WIP 9 clearly says illiquid tokens will be excluded. WIP 11 clearly says they will be unlocked evenly over one year. Which means it will also be locked, rendering most of them illiquid.
An investment proposal has nothing to do with how we manage our redemption process. So unless a special clause would be negotiated, the regular redemption process would apply.
The redemption Idea you brought did not help the DAO and whales found arbitrage, the redemption must stop, we brought you in to help treasure grow not to drown it. And we have not see any improvement on treasure when you came in, and the whales decided to keep you as treasure because they know you continue to find them opportunity to arbitrage. I see no wonderland if this redemption happens the second.
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I’m not TM soon. Redemption was voted by the DAO and community as well.
Talking about vote, the vote only the whales have upper hand then the smallest frog. Seriously if we want wonderland to thrive. We need to stop giving whales too much voting power, and they benefits from our small money. Always said the redemption was a bad idea when you proposal. We the smallest frogs where here in wonderland to make a little income and here we are always giving free meals to the rich.
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Bsgg now worth nothing, we have lost hope stop redemption and build wonderland with the remaining treasure, look at the size of the Treasury and we don’t have incompetent people to used to invest. The redemption is shit.
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Holders with more tokens have more voting power that is a good system already, if we are doing 1 vote = 1 point what’s gonna stop people from creating 4535345346 wallets with 0.000000000001 wMEMO in each one to rig the vote? The current snapshot system is fine, you invest more then you have more voting power.
The only way to make a system with 1 vote per person is with digital signatures, but it would be very inconvenient for some people to sign every time they voted.
Where I live, to sign an online document, you need to upload the .pdf to a gov e-id app.
That would require KYC and dox yourself in the process, nobody will go for that for sure, being anon in this space is the perk.