Wonderland

Scope

Discontinue the redemption process.

Objective

This proposal aims to end our quarterly redemption system and utilize our simplified more profitable method of buybacks and controlled liquidity to ensure market price stability.

Proposal

In a prior vote, we created a management team and ensured the long-term stability of the protocol’s core. The redemption procedure has become an obsolete method. In periods of uncertain management, it was established to guarantee exit liquidity. For a better outcome, we can leverage our new V3-like LPs on Kyberswap in combination with coordinated buybacks. We are always able to assure that the market price of wMEMO will trade in close proximity to its liquid backing.

The Treasury team has been able to concentrate liquidity in a manner that is favorable for the Treasury since the establishment of our LP on Kyberswap as a result of our strategic buybacks. We have the opportunity to use this system which results in more profit for long-term holders. We have been able to provide the same or better exit levels as during our quarterly redemption periods. The system is transparent and is available at all times to anyone wishing to exit. It also maintains our wMEMO supply at the current level.

The current system protects redeemers with large positions from slippage. It does not benefit the protocol nor its remaining holders. It comes at a direct cost to holders as the whitelisted funds need to be swapped and moved. Funds are not being allocated to return yield for at least as long as the redemption is active.

Wonderland adopted quarterly redemptions mostly owing to the unpredictability of past management and the frequent trading of wMEMO below its backing price. During that moment, Wonderland was unable to guarantee an exit at a reasonable price other than by issuing these redemptions. With the management transition this is no longer a problem. Treasury buybacks under backing price are lucrative, which is advantageous for all remaining holders, hence buybacks were decided to be the most effective alternative. The market price remains organically close to the backing price, allowing holders to sell anytime they choose without having to wait until the following quarter or be whitelisted. No lengthy or complicated procedures are involved. Exiting will need a straightforward DEX swap with fair value depending on the present backing price. It is a fluid system with no adverse consequences on holders, such as the freezing of funds or the temporary liquidation of holdings required for redemptions.

Redemption can be a complex process for some. It will be helpful to simplify the method used to maintain price stability. Those following the simple “stake and hold” approach will earn higher returns. It is our duty to look out for the vast majority of holders who expect us to manage this app well without their own constant micromanagement.