I’m not sure if this would really accomplish anything unless there was some linear unlocking that was setup either through a staking pool or through wonderland. With a 30 day locked pool you would just delay the dump for 30 days.
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Could it be less disruptive to these semi-liquid assets if we offer value redeeming in the form of the LP tokens that make up the pool. So hand out the SLP of USDT-BSGG. They can then do as they want with it, and selling would be reduced as you are giving out less bsgg to dump.
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You’re probably right. I’m just optimistically thinking people will forget after 30 days, or at least not be all on the ball, not dump all at once, so we as a VC don’t tank our own investment every quarter
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That would have never crossed my mind haha…
That said, I think for the sake of the redeemers, it’s better to keep it as simple as possible.
The simpler the process, the less chance of errors on them.
Which reminds me… We might want to consider going from USDC to USDC.e ?
It seemed to have caused a lot of confusion last time and some people losing funds by sending to unsupported CEX.
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Curious if there’s a particular rejection of this idea you have in mind besides complexity? If we’re being honest I think we can all safely say that almost none of this is actually simple.
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Not really. Users would still get their assets, but you make a good point.
If we’re being honest, none of this is simple. I’d say let’s try to keep it as simple as possible and not make it more complicated on purpose. We get so many questions about people not knowing how to wrap, stake or even where to sell. I think user experience is something worth considering given that this would be a regular process.
By giving those users SLP they wouldn’t even know what to do with them. If the goal of giving SLPs is to dump less of the impacted asset, then let’s just give less of that asset by converting it to something else imo.
Let’s not forget that while this may work in our current situation with BSGG , what if we aren’t providing liquidity for the next project ? Or that we stop providing liquidity for BSGG ? We’d need another way to do it regardless.
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I think Wonderland community does have more general knowledge on LP tokens than most. The minting process revolved around LP tokens, so I think the understanding is there.
Maybe the tokens just have to be vested to the redeemer over 30 days or something.
1 Like
I’ll start by saying I support this proposal because is does address some key issues discovered with the first redemption.
That being said, I don’t fully grasp how including BSGG in redemption is of benefit to anyone other than very large wallets. I’m pretty sure I saw in one of the announcements that the average wallet that redeemed held .03 wMemo…. Consequently, those weren’t the wallets that caused the massive and sudden price dump.
I think it’s silly for us (Wonderland) to create an environment which incentivizes an action that directly harms its own holdings. If Wonderland is operating as a VC and invests in projects that are meant to be long term investments, then those assets should not be included in the redemptions.
This is relevant for future investments as well. Why would any project be inclined to provide Wonderland more favorable terms in negotiations with the knowledge that there is a high risk that they will act in a way that is harmful to the project.
Someone above stated that in regard to BSGG, that it’s their fault for accepting the terms and they should have sought longer lockup periods, and they’re probably right. The flip side to this is that now whenever Wonderland goes into any negotiations for future investments I’m sure that one of the sticking points will be those long lockup periods.
Why does this matter? Because if Wonderland is seen to work in good faith with its partners/investments, then there would be no reason to insist on long lockup periods. That’s important because if there is a fundamental change in the health or outlook of the investment, then Wonderland will be in a better position to exit their position and limit potential losses.
Those are my thoughts.
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I agree - I don’t think redeeming for LPs actually solves anything. It just gives you another step to deal with for nearly the same result. (Being handed a coin that can be withdrawn for the coin you want to dump.)
Mostly wanted to be sure that we didn’t push the idea away under the guise of it not being simple versus it just not being an idea that we think will have a meaningful impact. 
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Why not make a disclaimer on the redemption page itself. “Warning your CEX may not accept USDC on Avax chain. Please consult with your CEX and/or a mod before transferring tokens if you’re unsure.”
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We’ll definitly have to properly document the process.
Should have been done for the last one 
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In hindsight, the BSGG deal was a centralized decision however you slice and dice it. Such deals were singularly dependent on the community leader(s) at that time staying active and in control of the community (and thus the DAO) via continued popular mandate. Secondly, as a percentage of ownership in BSGG, WL ownership is of a ridiculous size - and no project should have sought such a lack of investor diversification.
Further, the leadership landscape for WL has changed. A classic example: Castro didn’t honour Bautista’s commitments to the Casino Owners in Havana.
In the future, any VC target project must consider also the prospective risks of having what kind of investor(s) into the project. VC firms were dumping other projects and continue to do so whether liquid or saft exposures anyway. Those seeking funds from WL or any other treasury backed DAO must be fully cognizant that voting and DAO landscape can possibly change drastically.
Well sir, all I can say is that you are correct… kind of. Now let me elaborate:
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Yes, the investment in BSGG was a centralized decision and would fall under the purview of leadership at any particular point in time.
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Yes, Wonderland does own a ridiculous amount of BSGG. In hindsight it would have been wise to seek out a more diversified investor pool to avoid the current situation.
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Of all the historical figures to choose from to draw a comparison to the current debate, you chose Castro and Bautista. Personally, I would have tried to find someone a bit more favorable to compare myself to, but you know yourself better than anyone, so who am I to argue. I’ll come back to this particular point a little later.
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Yes, you’re right again. I am quite positive that in the future any future target VC project seeking funds from Wonderland will not make this same mistake.
Now that I have firmly established how right you are, I’d like to point out a few facts:
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327M BSGG were available for redemption, of that 310M were redeemed.
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A total of 1,074 wallets participated in redemption. The average wallet size registered for redemption was .033896 wMemo
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Transactions on redemption day show that only 39 wallets sold approximately 210M BSGG. So only 3.4% of the wallets that redeemed accounted for the sale of 67.7% of all BSGG made available through redemption.
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Of those 39 wallets, just 3 accounted for the sale of 113.2M BSGG
Let that sink in for a minute.
Now let’s get back to the issue at hand.
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I say BSGG should not have been included in the redemption process in the first place — and should be removed from any future redemptions.
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You have sited a multitude of reasons why including BSGG in redemption was the right choice and to paraphrase that “without an equitable redemption process I would be complaining of why wMemo was trading at $10k.”
For the record, I have no issue with the redemption process. I in fact participated. The only issue I have is the inclusion of BSGG as I don’t see it as beneficial to the vast majority of wMemo holders.
Now to wrap this up by addressing your Castro comparison.
Castro came to power in Cuba by overthrowing Bautista. His rise to power came as a result of Bautista allowing the evil capitalists to exploit Cuba and its people. Upon capturing power in the country he essentially kicks foreigners out doesn’t honor any previous agreement.
After all of this, Cuba is a communist country led by a dictator and its people largely live in poverty. Only a few people directly involved with or with close ties to the ruler are allowed to live in a life that some of us may consider a “life of luxury”. No, they’re not homeless, but they have little to no hope to improve their situation which is why so many have risked everything to get away and reach the United States.
Why is this relevant? Well, like those lucky few in Cuba, maybe 3.4%, only a handful actually benefitted from the inclusion of BSGG in redemption. The rest of us were the exit liquidity… much like those poor bastards in Cuba.
All that being said, BSGG will succeed or fail on its own merit and this will have no impact whatsoever on that success or failure. What it did do was cause a lot of wMemo holders to experience a steep and sudden decline in the value of the token they are receiving from farming.
The question is what is the actual benefit to the average wMemo holder that was registered for redemption, receiving approx. 6,000 BSGG?? The answer is none. At least none of any financial consequence. Especially not when only 39 wallets are receiving over 67% of the available distribution.
Then there’s the issue brought up by this amendment. Instead of allocating BSGG accounting for ALL wMemo holders, it was only divided up among those registered for redemption. Quite the financial windfall for those top 4 wallets especially.
In light of everything referenced here, I sincerely hope the Castro reference wasn’t a Freudian slip. I choose to believe you actually did value all wMemo holders and not just the few.
I also hope we can correct this issue going forward as the true benefit of holding BSGG will not be known until after mainnet is launched which is and has been a well known fact.
Thank you for your time.
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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.