Yes this is a very good point about the time needed to break even just to overcome a penalty. It will put off new investors, especially when the fund is largely non directional.
This isn’t a one off rage quit where those leaving pay a penalty to benefit the others. It will be a new ongoing and fair feature
Some things I notice being a WL holder.
What is being done to grow the treasury. Everything is going down. And there isn’t rev share.
What is the TM doing? What is Dani doing?
I think its very good to have a way for the community to get out. Olympus and Kronos have inverse bonds and they have a way out. Redemption is super good to keep prices above backing. Even SV is above backing!
Isn’t this just a recurring RQ? Can’t we vote for a redemption each time as a WIP?
What do I get as hodler if quarterly redemption?
No fees. 100 totally agree
Your redemption is essentially saying to wMEMO holders: if you come at that time of the month, you’ll get X MIM per wMEMO. That is a precisely executed buy back in a way, isn’t it?
More generally, in the context of Wonderland, nobody really talks about new people entering - it’s always about people exiting. A roadmap could change that if it was credible but mainly as you point out, the performance of the Treasury is very poor.
Currently we hold $23.5m BTC and $8.2m MATIC for example. Do we have any edge in predicting what those will do? Do we know the guys sitting on the Board of Governors at the Fed in Washington?
We also hold $25.6m MIM - the typical strategy is to be in USDC and buy MIM when it depegs - sitting on MIM to wait for the depeg is curious to say the least.
Quite common in traditional funds and agree it ties the performance of treasury closer to the TM which is never a bad thing.
I was drafting a redemption proposal in significant detail when this proposal was released. I have decided to synchronize our proposals but posted one of my own as I had a lot of background detail as well as detail on the exact process and incentives I wanted to add on, though I think we will agree on at least 90% if not more.
Do take a look: Wonderland Redemption II -- Conflicts of Interest, Changing Markets and a Way Forward
I think you should add a vote on this.
Add a vote that says “Should there be a fee for redemption?”
I will work on refining this and posting to RFC to improve it in the next few days, thanks for everyone comments/support. I’ve also discussed the proposal with SkyH yesterday via Discord for further input.
Agree with this proposal. Having something that honors backing is important. Let’s do it.
I of course agree with a redemption mechanism - and all the reasoning by Deal4412!
Devils are in the details on the process (some specifics are in Tikka’s proposal - so lets glean from that) as, this one is yet to discuss the details - which is totally fine since its at a discussion stage!
I would really love to see this really presented to the community, as its an important part of Olympus forks.
The crypto landscape has changed as well - and so has the world. Providing liquidity to users at the fair price is something the DAO should allow. We need a whole extra $1.00 at Costco’s for those hot dogs!
I agree with this proposal. wmemo is under backing price because investor sentiment in WL is low. It’ll take quite some time for WL to build back its reputation and a quarterly redemption would help do that as something investors can count on if they wanted to realize some gains. It’ll also stabilize the price near backing as it’d disincentivize those from selling far under backing as they do today.
Keeping in mind that this whole thing started as a way to bootstrapped a treasury, I will play devil’s advocate here…
What about disadvantages ?
Your first point is: “Allows holders to directly benefits from buybacks on a short-term basis”.
However, when I read your rationale, it sounds to me like buybacks are simply wasting treasury money because it doesn’t work anyway.
It seems as weeks go by, backing goes up from buybacks, but then goes down because of other investments/situations or negative macroeconomic conditions.
Is the positive that buyback would finally serve a real purpose if we can exit at backing or that with redemptions we would not need (regular) buybacks ? Because what is stopping us from going through the treasury twice as fast by doing both ?
People were worried that moderator compensation would drain the treasury at 300k a year. How much are we spending on buybacks and how much we will drain with redemptions every 3 months ? We’re already about 50% down from Rage Quit and the market being what it is, there is not much room for growth.
Also, I don’t believe we should adopt permanent protocol wide features based on current and temporary macroeconomic outlooks. Markets change, and implementing a feature based on current environments is short-sighted.
Should we not be worried that in Wonderland’s current state we will simply kill the project by draining and already struggling treasury ?
Second point: “Provides Price Support Closer to Backing”.
This one seems to go hand in hand with the first one. Essentially allowing people to arbitrage the different between market price and backing. Meaning a faster rate to the treasury until both price are close, but still incentives people to game the system. Doing it quarterly makes it more risky, but still a possibility.
In other words, the backing would be more closely aligned with the market price.
In other words, when the market dumps, people will buy low and drain high.
Again, it would be beneficial to work on improving Wonderland’s fundamentals instead of focusing on how we can give the best price for people who want out of the protocol.
Third points: Aligns Interest of Holders More Directly with Dani/SkyH
To me this is the weakest point in all three. The “chained/trapped” narrative is simply silly. Everyone can sell at any point. Plenty of people left Wonderland since inception. Some at the top, some of the bottom.
People often criticize those selling under backing, but who is really being irrational here ?
As for encouraging the TM to provide good returns, the TM’s whole salary is based on performance/profits. If that’s not incentive enough, I doubt that “satisfied holders” will change that.
That being said, if we do have a TM that cares more about user sentiments than the returns he can help the protocol make, why not simply have a higher level of revenue share ?
That way, everyone makes money, performance is still incentivized, and while we may slow the treasury’s growth, we are not reducing it on purpose.
More disadvantages ? Don’t mind if I do…
A bigger treasury produces less yield when farming?
While it’s true, the TM should be maximizing the yield. If farming with less provides better return, then they could farm with less and use the extra for something else. Making 2% on 200 million is still 20% less than 1% on 500 million.
Having less money on hands also means missed opportunities.
Sure, we’d still be able to invest in different projects, but with less capital we might have to choose between two profitable projects instead of investing in both. Reducing the overall yield generate by investments.
Having a bunch of money that does nothing is useless.
Well, I don’t remember hearing Berkshire Hathaway complaining about having too much money on hands. “Dormant” cash means we can more easily take action when opportunity presents themselves without sacrificing some of the yield already in place.
Having more capital also means Wonderland can be more competitive.
Whether its in terms of merger or in terms of acquisition, it’s easier for Wonderland to have the upper hand when more money is available.
Want to have the best to make frogs happy ?
Quality is not always cheap. Not everyone can live off the love and admiration for the community. Staff got bills to pay and people to feed. If someone or something can bring tremendous value to Wonderland, it’s important to lock them down. Not being able to do so because diminishing capital would be a shame.
State of DeFi
DeFi adoption is still very low and protocol like Wonderland are very early in the space. In such a growth market, capital is king. From everything mentioned above like acquisitions to simply being able to have a more diverse risk profile, a limited capital will create limitations for Wonderland.
To rest this devil’s case, while the community is the heart of Wonderland, the treasury is the brain required to execute anything and everything.
Instead of finding a way to bail out those that don’t want to sell because of an imaginary backing that was discontinued, should we not focus on what we can do to the help Wonderland grow and attract/retain LONG TERM investors ?
In terms of RFC, we would need to have some of the lower details like redemption mechanism and asset distribution. These could always be discussed in the RFC itself and maybe even have some type of AMA/discussion around it with some of the more knowledgeable people. We’ll see…
Buybacks don’t waste money away. It adds to treasury backing per coin. A redemption allows for some people to get that backing faster.
Mod pay is an expense. It takes away from the value per coin. Thats not the same. Not saying that there shouldn’t be mod pay. Mods are doing a good job while Dani goes fishing.
If the project has good governance plus leaders (who don’t aren’t interest conflicted thieves) then the project lives.
Market dumps, people will just buy to make the arb and it doesn’t go down that much.
Really think people should be able to get out a fair value. Even though there’s a hit right to Sifu, he is a good manager - and he allows for redemptions. Why?
TM doesn’t have salary. It just profit share. Ruined by Dani’s stupid trades. What makes you think SkyH stays?
Something else, seems to mean buying bitcoins, ethereum, and a collapsing UST. its value destructive… and those opportunities weren’t missed.
Staff is mentioned? What staff? Mods? Same as redemption, you are free to go seek greener pastures, because this one scorched earth.
Long term investors will long term value taken away unless something is done about the multi-sig. Lost too much on convex already.
I would like the fees to be limited to the total transaction/gas fees necessary to complete the redemption across the different asset classes in the treasury (mim,eth,etc) but if that is not agreeable to the group then I would propose treating it like a cc merchant transaction of 1.5 - 3.5% max in addition to transaction fees
Another alternative would be to use the Convex approach:
Convex has no withdrawal fees and minimal performance fees which is used to pay for gas and distributed to CVX stakers. We could do the same.
I would try to write in an objective matter on these regards - specific to technical items:
Point:
Is the positive that buyback would finally serve a real purpose if we can exit at backing or that with redemptions we would not need (regular) buybacks ? Because what is stopping us from going through the treasury twice as fast by doing both ?
My Counterpoint/Explanation:
The speed of the buybacks would inevitably slow or stop if the price of wMEMO is near the a “KPI” figure in regards to buybacks, such as liquid backing price. Those who want to redeem will also be less inclined to do so if the price is near or at the backing price due to:
Point:
Again, it would be beneficial to work on improving Wonderland’s fundamentals instead of focusing on how we can give the best price for people who want out of the protocol.
My Counterpoint:
Amongst other governance upgrades in the DAO, a redemption mechanism I believe is a key improvement of Wonderland’s fundaments in itself. Allowing for safe-fail exit measures gives assurances on downside, and encourages people to take risk (ie. higher than such safe-fail exit prices).
Point:
Third points: Aligns Interest of Holders More Directly with Dani/SkyH
To me this is the weakest point in all three. The “chained/trapped” narrative is simply silly. Everyone can sell at any point. Plenty of people left Wonderland since inception. Some at the top, some of the bottom.
My Opinion:
This is correct that this aligns interests with me: but only on a myopic view.
Immediately: The risk-adjusted revenue that would be collected is amplified by the value of the treasury over time. Redemptions would shrink the treasury. Thus, I lose out on the total set of fees. Thus not aligned.
Long Term: If there is a mechanism like redemption, there may be even inflow as users see the risk mitigated of entering. At such points, maybe things like minting may come back into play. Again, its about having the right specs, to attract users in the long long run.
I am a firm believer that the treasury must be optimized for the users, the DAO. If there are no opporunities, funds can be returned, as similarly to give confidence that when funds are asked then users are happy to return knowing that there are ways to get the money back.
Rage Quit was an option once only. Keep that promise. This is not a kindergarten, nobody will hold your hand and cover your losses. RQ and this idea literally means you want me to give you my money. Did you do me a favor or service? Did you gave me money? If not, why would I give you my hard earned dollars?
The issue is the market price is way lower than the backing price.
The solution should be the treasury buys back all the tokens at this low price, then burn them.
This not a kindergarten. That is right. This is a shitshow.
You know you’re right, in a proper place sure buyback from sellers and add on to treasury backing. But ever think for moment - all these commentators aren’t idiots - so maybe they know something you don’t know?
Shitshow? Then swallow your losses and get outta here.
They know something I don’t? Not possible, I know everything! 
Redemption is a feature in many other protocols, why can’t we include it? It will bring the price closer to backing, onboard new users since they have a way of reducing risk knowing that their position can be exited in whatever time frame we agree on.
Yes the value of the treasury will go down however the backing will still remain the same but don’t forget that larger treasury doesn’t necessary makes it better.
Absolutely on point. This is a long term play that benefits everyone.
100% agree. One of the things that attracted me to the protocol was the commitment to honoring the backing price and I would wager we see renewed interest in WL if we can demonstrate a way to allow investors to exit at a predictable level.