Proposal - Based Buybacks : Detailed analysis/avoid current pitfalls

General Discussion
1

Frogs,
Being a long-term time holder, I know how you feel. After watching from the sidelines, I think I have to give my thoughts about current situation and the way forward, if we choose to continue as a DAO.
I’m a financial engineer, full-time crypto investor, and a CFA charterholder who has worked in investment banking and fintechs. I’m currently building my own reserve currency, focused on professional investment management and creating a whole financial ecosystem around it. I won’t link it here, because this post is not about me, but about Wonderland and how I can help it.

I want to focus on buybacks below backing here. Buybacks are good in almost every situation and I think a must here.

Let’s go through a simple example :
Current price : 50
Backing price : 100
Circulation supply : 1000
Treasury : 100 * 1000 = 100 000

If we buy 10% of the supply at 50 :
Circulating supply : 900
Treasury : 100 000 - 100*50 = 95 000
New backing : 95000/900 = 105.55

If we buy 50% of the supply at 50 :
Circulating supply : 500
Treasury : 100 000 - 500*50 = 75 000
New backing : 75000/500 = 150

Buybacks are a great way to give back value to holders and, I think, necessary to reward current holders.

The drawback of buybacks is the treasury bleeding. This is a bad thing if we plan to have professional management for the treasury aiming at long-term growth. However, we are currently making close to 100% profit on buybacks at current price. Allocating some of the treasury now to do buybacks to sell bonds in the future to raise more capital at a higher price is a very powerful and high-yielding strategy.
How much time will it take for the new team investing the treasury to make a 100% return on the funds?

When we look at buybacks done until now, the average price was around 30k because of the price impact. We bought huge sums just to get dumped on. It was still a net gain for the backing as we bought below it but this is really a sub-optimal way of doing things and it creates frustration among holders, who feel abused and may end up leaving the protocol, creating the infernal cycle we have been seeing over the past few days. We are giving free money to those who instantly dump, we could optimize our buybacks to prevent this from happening .

We need Smaller buyback : we need a lower price impact on the buybacks to create what we call a permanent market impact in the financial industry. Big buys shift the price but the market impact is temporary, as people instantly sell. By making smaller buybacks, we are more likely to shift and influence current price trend in a more healthy way.
Smaller buybacks will improve also our average buying price, giving back even more value to holders by increasing more the backing price.

We need a safe investment space. We need transparency, we need integrity, we need professionalism.
I believe Wonderland can be part of the space if we rebrand and start to leverage the frog nation’s talents to rebuild and come back even stronger.

TDLR :

  • Buybacks are good

  • Buy over time with a pre-allocated budget and in small sizes to improve buybacks’ efficiency and capture all the value instead of sharing it with front runners

2 Likes
2

Agree, with this but we need to be able to lock out tokens, the selling pressure was much lower when we were staking time, as with wmemo being a tradable asset these days

3

just keeping them in the treasury for now and later decide what to do with them.

We can imagine operating as a VC and fund. We do some buybacks, we regain trust and up the backing.
We start investing, we make good choices, regain even more trust. Now we can sell those wMemo higher in the future to raise more capital for investment. We don’t need such a big treasury to start with a new investment team. They can prove themselves then frogs will give them more to invest.

2 Likes
4

buy backs are not good imo. and if you do it especially now, then people will just sell the buy back, so unless you want to do it to get rid of those people, then i wouldnt vote on buy backs. Id much rather let the market recover naturally, after all our treasury and memo supply indicate a much higher price then our current price. Save treasury funds for when we hire the teams that will work for us.

2 Likes
5

Hmm i think that its pretty ironic to be building your own DAO system and still want to be contributed with the Wonderland system.

As far as im concerned, Sifu might work with you

Hell even YOU might be SIFU

3 Likes
6

Buybacks and leverage are never good in a system like this. Leverage creates an inflated value and buybacks give an incentive to pump and dump. You need to give people a reason to invest and reinvest, not invest with the only goal to just sell off at a higher price. Revenue share should be the main objective and thats only possible with a big treasury that makes other investments outside of the ecosystem or else it eats itself from within. I wish i could have a conversation 1 on 1 with Daniele about all of this.

7

you can buyback now and sell (bond) later to raise capital.
Regarding the dump on buybacks, you have to make them smaller and around a certain price, rather than just buying 5m at once.

8

Well well well … just who in the hell is Boss imp??

Don’t come in here and start barking orders !! What Dani has done for Wonderland and us frogs and the entire Defi community F**ING AMAZING !!!

-Chuck

9

Buybacks are a horrible idea. If you love the project. Why wouldn’t you want a cheaper token to get into the project? Frogs BUY wMEMO.

Backing rolls the red carpet out for sellers. The only time you use the backing is to sell. At expense of our treasury. Currently if you buy 1 wrapped memo. Its 20k but it represents 40k in our protocol. That’s the value proposition of an open market, you’re getting a 100% premium.

10

Buybacks are bad, if you are not the person who clicks buy button.

Giving authority to frogs to sell their wMEMO’s at backing (RFV) to treasury is good and creates TRUST.

You can hodl or sell at backing price.
gl.

11

buy now up the backing value for frogs. So frog win, when you enable redeeming at a higher backing price in treasury.

Buybacks increase backing value which increase the value they can redeem at. If your point is maximize final value at which you can redeem, you should be for buybacks

12

I can see this working, the key is to have a lot of very small buybacks so it’s contant buy pressure and not huge pumps that act as exit liquidity for dumpers.

Having a bot do hundreds of buybacks per day would be very interesting.

13

not necessarly hundred, but doing 16 buybacks of 250k instead of one with 5m.
We can even size a bit smaller to 100k for less market impact.

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