[DAO Discussion] Downsize WL Treasury and distibute to holders

Governance DAO Discussion
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[DAO Discussion] DOWNSIZE WL TREASURY AND DISTRIBUTE TO HOLDERS


Objective:

Downsize Wonderland’s treasury to a more manageable size and redirect funds to holders.

  • Reduce Wonderland Treasury size from ~140m to a healthy ~30m
  • Distribute liquid assets to all wMEMO holders
  • Make no changes to illiquid assets and organisational structure
  • Compensate current moderators, dev’s and TO’s for shrinking the protocol with a one-off payment of $100.000 (distribution t.b.d.)

Community Interest:

  • I would like to see a formal proposal
  • I am not interested in seeing more

0 voters

High Level Details:

Downsize Wonderland’s treasury to a more manageable size and redirect funds to holders.

  • Reduce Wonderland Treasury size from ~140m to a healthy ~30m
  • Distribute liquid assets to all wMEMO holders
  • Make no changes to illiquid assets and organisational structure
  • Compensate current moderators, dev’s and TO’s for shrinking the protocol with a one-off payment of $100.000 (distribution t.b.d.)

The goal of this proposal is to increase effectiveness of Wonderland due to winding down a large part of the treasury in an effective way that provides value for Wonderland holders. Wonderland is currently traded at ~29k$, whilst having a liquid + illiquid backing of ~36k$/wMEMO. This proposal seeks to distribute a large part of that value back to holders, whilst keeping the Wonderland governance and investment framework in place.

There are two arguments leading to the timing of this proposal.

Wonderland’s treasury is idle
Wonderland transformed from an OHM fork to IAAS (Investing as a Service). The goal is to invest the treasury of ~140m$ in mainly low risk projects and farms to maximise the risk/reward for the wMEMO investor.

However, most of Wonderlands funds are sitting idle. Despite admirable progress in organisational governance and processes, we did not succeed in deploying the treasury in farms and promising project tokens.

The added value of depositing assets in low risk farms is debateable, since this strategy could be implemented by Wonderland’s holders themselves.

The conclusion to be drawn is that Wonderland is too big to effectively manage the treasury and optimise the risk/return ratio for investors.

Risks of Sifu Domination
The Wonderland community currently seems to loose the steering wheel to Sifu when it comes to deciding on the future of Wonderland. Sifu has proven to be a competent treasury manager for Wonderland in the past. However, since he is actively involved and managing a number of other protocols and his own wealth, the risk of conflicts of interest arises.

a) Sifu/SV currently holds >670k TIME for snapshots. In the 10 most recent TMP or WIP votes Sifu is solely responsible for 71% of all wMEMO used to vote, all which logically led to a Win for Sifu. Among these were approved proposals to increase UwU Lendprotocol exposure limit to 20% and Lock UwU-ETH LP tokens.
(Fun fact: In 5/10 Sifu didn’t use all of his wMEMO).
b) Wonderland moderators are employed in Sifu protocols SV and UwU.
c) Appointments of Treasury Operators are assigned by voting which creates dependance.
d) To ensure that Wonderland is not too heavily exposed in some direction the position of Risk Officer is created. Sifu is appointed to this position (a.i.).
e) Sifu managing liquidity.
f) Sifu’s wMEMO bag still increasing due to market buys.

Low Level Details:

When possible, describe more specifically individual components of the subject, focus on the details and present information in a structured way to help the community understand the proposal.

Proposed timeline:

  • Take one month (January 1st to January 31st) to communicate treasury distribution
  • Distibute assets no more than 1 week after.
  • From the moment the proposal is accepted, take no actions that change liquid assets positions.

Furthermore:

  • Communicate often and omnichannel to give less active and unaware holders ample opportunity to stake their wMEMO in the farming contract.
  • Create separate discussion to settle on distribution for mod, dev and TO compensation.
  • T.b.d. a [1 month / 1 year / no ] deadline to how long a TIME / MEMO / wMEMO investor is able to claim liquid backing.

.* The numbers provided in this proposal are not exact, but merely to provide insights.

*edit: previous version of the proposal involved using the rev share farm to dissolve. This is removed although it is effectively the same as using a run-up period of e.g. 1 month. *

Since a DAO Discussion is meant to introduce a proposal, not all information may be available at this stage. The discussion should be used to measure the community’s interest in what is being proposed. If the minimum requirements are met, it can be submitted as a Request for Comments.

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Hello @AvocadoInvestor, thank you for the proposal.

Currently, you are able to redeem your Treasury shares. This process is called Redemption.

Essentially, you’re proposing to “rug” the shares of all the holders who aren’t paying attention, and they’re not staked. You’ll see people coming in Discord regularly saying “Oh hello, I was away for six months, what should I do?” and moderators helping them with the wrapping and farming. As if the cascades of last year weren’t enough, you want to shrink their position even more.

I’m against any kind of holder rugging, thus I can’t support this proposal.

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I’m with Cata on this. It is not fair for token holders who are not currently staked in the farm. Does not make sense to shrink the treasury either.

Yes, it is too big to be deployed efficiently. If we had a need to actively deploy $30mm, we could without doing what you are proposing. Also, I don’t see how shrinking of Wonderland’s treasury got anything to do with Sifu.

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This is a topic that comes back once in a while so I believe there is merit in discussing the idea.

However, I do have a few issues/questions with some of the things mentioned so I will mainly comment on those.

Does that mean 30mm liquid plus the illiquid assets or 30mm including the illiquid assets ? Are you a mod alt trying to get some money on your way out :eyes: (kidding ofc).

Wondering the main rational behind this a you don’t mention it again in the proposal ?

This is the main issue. Doing so through the farming contract would essentially rug everyone else of their shares. You are assuming that people who are not staked are dead wallets or lost their keys, but there is people coming back to the Discord almost every day being like “hey what do I do now?”

Taking away such a huge part of money would create an additional reputational blow to Wonderland, but would also more than likely cause us legal issues as we look at moving towards a legal entity.

There have also been discussions about removing the farm for this exact reason.

I think that conclusion is a bit flawed. You say yourself there has been “admirable progress”. The Treasury Operators have only been in place for what is soon to be three months ( I know it feels like 3 years in crypto).

I’m not sure it is fair to expect over 130mm to be deployed in less than three months. Especially given the current market conditions and the giants of the industry that fell over the last few months.

Now, is the treasury too big ? Maybe. I am not a believer of those who think a project like ours can have too much money, but some, like yourself from what I understand, do.

So while some may make the argument that we have too much money, I would not attribute this to not being “successful” in deploying it.

Kind of sad to see that this is such a major part of your proposal, but it is what it is :sweat_smile:

Conflict of interest aside, this unfortunately is a symptom of a bigger issue that is our engagement level.

Some of it is due to us essentially telling our holders to stake and forget about it (which most did/still do). Some is due to people feeling like there is no point to participate. Some of it is because some people just don’t care lol… etc. etc,

There are other whales, who even though may not be able to flip Sifu on their own who also have sporadic engagement for multiple reasons.

This also brings the question, how are you going to pass this by Sifu ? :joy: Unless you believe it would be in his interest too and he would vote in favor.

Just to clarify here, my understanding is that SV is unpaid, but other may be able to clarify. Your point remains nonetheless.

All officials positions have been voted and they would also be voted even if Sifu didnt want to vote on a position.

Sifu is no longer interim Risk Officer, which is why there has been so many TMPs recently as the DAO makes the decision to assume the risk.

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& @hypermassiv

The argument here is that I’ve previously seen a protocol dissolving, with all people having the right to claim ‘their’ part of the treasury. In that protocol, a significant chunk of tokens were not claimed. Those tokens were then absorbed by the devs, which to me sounds like the least desirable scenario. I’d rather have the holders profit from this, than the devs.

Truth is that - despite redemption - many holders here are still stuck. Wonderlands backing is 36.384$, but the redemption does not provide an opportunity to retrieve that.

Any form of rugging is obviously out of question. The time period is arbitrary, and it could be a lot longer, e.g. half a year. An older option is to do redemptions at full backing price, but also with that option, the unclaimed / dead wallet’s value is becoming idle.

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Frankly this just seems like a bank run, rug, and/or cash grab and I do not support this.

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Thank you for the in-depth response to the proposal. That is a clear sign of the strength and genuinity of the protocol management.

It’s a quick pencil-draw of the liquid (110m) vs. illiquid (30m).

Good question. There are two arguments here:
1- The rationale is that if wonderland stays the size as it is, there is more budget to compensate mods, dev’s and TO’s. The salaries and budgets of when WL was a billion dollar protocol are unthinkable at the moment.
2- I don’t think it is healthy for people managing the protocol to be in a conflict of interest for themselves.

Serious issue. Will come back to this in a separate post.

This is the core issue to be addressed with this proposal. I firmly believe it is so and with me a lot of other investors. I don’t think it is up to mods / TO’s to decide whether this is the case.

I think this issue is very underexposed by the community. I never hear mods / TO’s being transparent about this, or stating this as a risk. And to be fair, I think at the moment we are even past the point where the community is able to put a halt to this influence with minor changes to our system.

That is a mistake.

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Well Wonderland is not dissolving.

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This proposal had been adjusted to address this issue.

Core of the proposal is - and should be - dissolving a large chunk of the treasury as I believe the characteristics of the protocol does not facilitate it to be effective in managing a treasury with the size of 140m.

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Then why farm? You can guarantee that the protocol gets nothing while the farm method just rugs holders that aren’t staked and gives more to the ones that are.

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Stuck is relative - if the reason for this proposal is a claim at backing option than this does in no way come across in your proposal.

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So you are proposing to wind down and leave $30mm illiquid funds in the protocol? Trying to get how that works out, at all.

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$250k payment to team/mods looks just like a bribe to help push the proposal, no thanks. I agree what others already pointed out.

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I don’t see how having less money in the treasury can be consider as “healthy”, it seems rather unhealthy and rather a 4th stage cancer. My name is not The Ferengi and I do not approve this proposal.

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This proposal is lit. You have my vote :+1:

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How many zeroes should be added? :sweat_smile:

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Lit proposal and definitely not a rug… :joy:
(funny thing is if I’d get my 10k back, I’d support it)

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I think this is something worth discussing, and putting this up for a formal vote would make sense if it gets enough traction.

I do think that $30m is a bit too low - I would personally see a $60-75m level as sustainable in the longer run (although with the dead markets at the moment it would be a little challenging).

I’m voting in favor of this progressing to a WIP.

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download

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It’s true that Wonderland would benefit from a size reduction. However, it could also be achieved in a gradual and orderly manner by a combination of increased revenue sharing payouts and buybacks. For example, if Wonderland were to distribute 30% of the current treasury level evenly over the next year to staked wMEMO, it would be left with a still rather large treasury of about $100mm (net of yield produced during the year) and farm stakers would receive around 80% APR for the year. That would be a more balanced approach.

An arbitrary bribe to the team makes no sense particularly when the proposal envisions no changes to organisational structure.