Please read this new proposal by the Professor and vote (informally) at the end on your choice so we can gauge sentiment.
P.S. This does not endorse The Professor for any position and only takes into account the ideas. We all agree that anyone new running the treasury will need to be fully doxxed.
Raging in Wonderland
How a Rage Quit Solution can be a fair outcome for both sides
Hello again Wonderland family. I am just catching up with some of the events of the last few days and would like to thank those that provided support, comments and suggestions to my last article. I am taken aback as to how engaged this community for a path forward. I initially wrote the article with the view to help the community understand the untapped potential of Wonderland, through my lens, having experience within the PE turnaround arena and what was possible with some adjustments. I still truly believe that this could be one of the biggest things in Defi moving forward.
However, we have come to a critical juncture. We are currently in a place that is akin to purgatory, treading water for what seems to be perpetuity. Sifu has gone and with him much of the operational work ethic and elbow grease that came with it, which will now need to be replaced.
My last article was intended to give an overview of some of the actions I would take with Wonderland but it’s important to note that these cannot be all done overnight. We need to prioritise each according to its importance. And the rage quit solution is top of the agenda. Before we decide on management, APY, revenue share and other fundamentals, the next vote needs to be for a Rage Quit proposal. We need to stand together moving forward and this is dividing us.
Before going into my reasoning for allowing the rage quit solution, I would like to spend some time discussing what the team has achieved so far. They have been incredibly successful both from a yield farming perspective and an investment perspective. It is easy to forget amongst all the FUD but here are some highlights to be reminded of:
- Betswap: Many people don’t realise that the DAO’s first investment has already netted a 500% return on investment within a one-month time frame. The DAO invested $18.337 million for a total of 2.096 billion BSGG token at an average price of $0.0087 per token. Today, on the verge of a main net launch the token is trading at $0.045 per token, where the DAO holds a $90 million position on its books. This is close to a 500% return in one month on this investment, without the betting platform even being active. To all the FUDsters out there, what do you say to that, anon?
- Whilst identifying VC investments, the team also made several crucial calls with regards to yield farming that has only served to enhance the Treasury value. Recent decisions on switching TIME/AVAX pairs to TIME/MIM and wMEMO/MIM has helped secure profits as well as continue to keep liquidity for the TIME/wMEMO pair high. Additionally, they received first preference on the UST-MIM leveraged stable farm (Degenbox) where $150 million was deployed to earn close to 120% APY with no directional risk (this has now been unwound). Adding to that, they managed to lock voting power for their CVX purchase at more than double the APR that everyone else would be receiving. With $57 million of buying pressure coming in the next few weeks given the three governance proposals of Frax, Yearn and Paraswap, does this sound like a good investment to you? And who could forget the timely Avax OTC swap made with Alameda on the eve of the early December crash which saved the DAO ~$10 million.
Yet people still want to believe that because of a few setbacks, that Wonderland will never recover to its previous heights? I am hard wired to look at performance only and seeing what the team has been able to do with their farming and investment returns, one should look at this as one of the best buying opportunities currently on offer in Defi.
Rage Quitting and Buybacks
Now let’s move onto the Rage Quitting proposal, which seems to be a hot topic within the Wonderland community. Everyone seems to have their own view based on their own personal circumstances. Below, I will outline the rationale for the opinion in my last article as to why we should allow a rage quitting solution to those who want it. But before I go there, let me ask you: What is a protocol whose word means nothing? Will it ever succeed in the long term? In my view, it won’t.
Investors who invested in Wonderland were told by the Wonderland team that the backing price would always be defended until the DAO decided in the future that this should no longer be the way forward.
Whether you believe in buybacks or not is irrelevant: this was the word of the Wonderland team which formed a basis for people’s investment decisions. Even after Sifu left, this should have been executed until a vote was complete to say otherwise. Your word is part of your brand.
Rage quitting is a solution to allow those investors that have been with the protocol for some time to exit with their share of the Treasury without the need for buybacks, but it essentially achieves a similar thing. Some are tired from all the drama that has ensued in the last week and are emotionally drained and want a fresh start. In one week, we have had a liquidation scandal, a failed merger proposal, Sifu Gate and two Snapshot votes with a third on the way. It is only fair to those people to give them that option, especially since buybacks were promised. To not allow it, will be shortsighted and eventually be the death of the protocol. In the longer term, we will gain trust amongst the community and once Wonderland is flourishing once again, those same people will likely be future investors.
Some people are looking at this situation as a zero-sum game, in that your side can only benefit to the equal detriment of the other side. Both sides will be unwilling to make any concessions and both sides will be forced to deal with the poor consequences of not reaching an agreement. This is a lose-lose outcome. A win-win outcome would see a compromise in reaching a fair middle ground where both parties gain something and also give up something.
But Professor, it is not fair that those people are allowed to raid the Treasury considering I have been Hodling since the genesis of this protocol? I hear you, but there is a solution for both sides if managed correctly. Here are my recommendations:
- Shut down all trading and remove LP liquidity effective immediately. This will eliminate many of the worries from some frogs about whales and sharks that are currently not invested who try to game the system by seeing which way the vote goes and buying in at the last second to arbitrage. Don’t worry about those that bought in opportunistically after Sifu Gate and are still holding, as many have exited their positions in the run up to the vote ending anyway, given the uncertainty that abounds.
- Have the Wonderland Team provide a clear calculation around the backing per wMEMO that rage quitters would receive. In the calculation, they should provide:
- the total circulating supply in wMEMO (converting Memo and Time positions);
- the DAO owned supply in wMEMO (converting Memo and Time positions);
- Non-DAO owned circulating supply (total circulating supply less DAO owned supply) (“Non-DAO Supply”); and
- The total asset and Treasury value including single sided assets, stripped LPs and BSGG airdrop, but not including the BSGG vested tokens, Cross of Ages allocation or native tokens (“Treasury Value”).
- wMEMO = Treasury Value / Non-DAO Supply.
The BSGG airdrop was equal to 500 million BSGG, which equates to 23.85% of the total owned BSGG by the DAO. The total BSGG asset value is approximately $90 million, which means that rage quitters will lose access to $67.5 million of asset value.
3. Allow a 48 hour window for rage quitters to claim. Airdrop all BSGG tokens to everyone during this 48 hour window (no more wen airdrop questions please…)
4. Once the rage quit swap has been concluded, shut down the LP and trading for another 2–3 weeks until new management is appointed to take over and the path forward is clear. For those that decide not to rage quit, there should be an APY multiplier during these few weeks where the reward yield is increased by 25–50% the normal rate (management should decide this figure).
5. Prior to reopening the LP, the DAO will burn all wMemo tokens from the rage quit swap and any other DAO owned tokens management sees fit to decrease circulating supply and have an effect on lifting price above backing.
The above recommendation allows those that are staying with the protocol to benefit for a few reasons:
- The true backing price excludes BSGG vested tokens which means that the Treasury value for rage quitters decreases and those that remain see an uplift in the backing they own once the LP reopens;
- The APY multiplier is only available for those that remain with the protocol. It allows you to turbo charge your percentage of the Treasury before anyone can buy back in once the LP reopens.
- Trust is maintained by the protocol with those investors that exit, which will most likely lead to future investment from them once Wonderland is back on track.
- Should we ever decide to allow bonding in the future to increase the size of the Treasury, those that chose not to rage quit, can be given preferential terms to access the bonding pool before the public.
Right now, we need a shot of immediate adrenaline to kick start the project back to where it was a month ago. If we don’t decide on this lingering issue in the coming few days, we will go around in circles indefinitely with a divided community.
The Path Forward
Once the rage quitting solution has been put to bed, I believe that we need to take a breather to bring on new management with a particular focus on COO and CFO/Treasury Manager positions (the remaining positions can be filled over time). I have read the Wonderland 2.0 proposal and whilst it does bring up some good suggestions, I believe that the Governance Structure is too cumbersome and would not allow the protocol to reach its full potential:
- Having the DAO “set strategies” would bring mayhem in my opinion; everyone has a different view on investments and farming opportunities and this should be left to management. If you were investing in a hedge fund, would you expect investors to be allowed to set strategies for the fund manager? I believe that the DAO and the community should act as a collective consciousness and make suggestions through a dedicated portal for investment and farming opportunities as I highlighted in my last article. This ‘collective’ can be one of our largest strengths and allows us to use our community to hunt investment opportunities and actively contribute.
- In my experience an oversight committee is not needed; I have dealt with fund administrators (whose role is to oversee regulated funds) many times in the past and they only hamper fluency and efficiency. The management team should be able to execute as they need to (taking into consideration the suggestions of the DAO).
- Having a gMEMO and wSHARE token is too complicated for most investors. If wMEMO wasn’t well received, this will only add confusion. I believe that one token with monthly airdrops in MIM is all we need. I believe the DAO should vote on whether we transition to a new token or stick with Time/Memo or wMemo. I think moving back to the Time/Memo system for now would be the least confusing to most.
- I agree that we should eventually transition to a fixed supply with zero rebasing, however perhaps we give a period of three months for this transition and gradually cascade the APY. During the 2–3 week transitory period mentioned above, I believe management should come up with a fixed supply of tokens and how the APY will gradually decrease each week. That way it is clear to all. During the transitory period, I believe the DAO should only vote on the following aspects to limit confusion:
(i) APY mechanics: Either eliminating rebases immediately, gradually eliminating rebases or keeping rebases as is.
(ii) Confirming they are in favour of a fixed supply of tokens.
(iii) Transitioning to a new token and contract or keeping Time/Memo or wMEMO.
(iv) Hiring of core positions to be filled.
Daniele and the team will be back to their raging best soon and all of this drama will be a distant memory. But to get there and fulfill our true potential, we need to vote on the rage quit solution as a matter of urgency. As highlighted above, those rage quitting will get the short end of the stick if managed correctly and those left in the protocol will actually have a higher backing price with more tokens to their name when trading resumes. I believe this is a fair outcome to all.
For those that would like to discuss further, I will make myself available on Discord in order to assist the community in any way I can.
- I agree with this Rage Quit Proposal
- I DO NOT agree with this Rage Quit Proposal
Furthermore, please vote so we can gauge your interest in changing the token name or we keep it as is:
- We should stick with TIME/MEMO or wMEMO with monthly airdrops in MIM
- We should switch token name to gMEMO and wSHARE as suggested in Wonderland 2.0