AIP #6 - Abra Team Proposal: Abracadabra + Wonderland Merge

Frog Nation: A bold idea potentially becomes the biggest thing Crypto and DeFi have ever seen.

Introduction

Frog Nation is a collective of projects which work together to push Defi and the overall crypto industry forward. Currently consisting of Abracadabra.money , Popsicle.finance, Wonderland.money and the most recent addition of Sushi.com.

Wonderland is consistently using Abracadabra cauldrons and builds strategies which are used by Abracadabra’s Degenbox. Both projects have interconnections from cauldron usage, liquidity provision, incentive voting on Curve to boost MIM liquidity, to building unique degenbox strategies around yield farms which Wonderland discovers and amplifies by using Abracadabra CDP’s.

When analyzing Abracadabra’s and Wonderland’s strengths and weaknesses it becomes clear that their partnership significantly increases both protocols’ ability to perform.

The Abracadabra and Wonderland teams see considerable synergy in merging the two protocols together.

The following proposal is looking to showcase what such a merger looks like and the benefits of uniting both protocols.

Abracadabra

Since its first inception and launch in May 2021, Abracadabra Money has proven to be a pillar of cross chain DeFi and of the Frog nation as a whole. With its isolated lending markets and built in leverage function, it has completely revolutionised the DeFi landscape.

MIM adoption, TVL and Fees Produced by the protocol have been increasing steadily, and together with it the efforts of bringing a truly decentralised cross chain stablecoin.


Abracadabra TVL since inception, source: Microsoft Power BI


Abracadabra Fee Generated Per week since inception: Microsoft Power BI

Just to mention some data, the cauldrons are currently sitting on more than $4.6B in TVL across the 4 chains Abracadabra is deployed on, with this figure hitting the $6B threshold before the latest market drawback.

MIM has swiftly become the go-to decentralised stablecoin with more than 75,000 unique holding addresses on its 4 different chains (Fantom, Avalanche, Arbitrum and Ethereum). MIM peg held steadily even in the harsh market conditions we had to face, thanks to the deep liquidity built. The MIM-3Pool is the second most liquid pool on Curve Finance with more than 80M in volume alone on ETH (at the day of writing this proposal), and a TVL of $2,670,814,141.

This result is even more astonishing considering the fact that the protocol has been steadily decreasing its SPELL emissions for the past 3 months, without affecting the depth of the liquidity across the chains on which MIM is used.

Wonderland

Wonderland first announced its launch on Avalanche in September 2021. During its initial phase, the DAO focused on community growth and treasury diversification, quickly amassing a treasury of $1B USD and growing its community to more than 360,482 users. This expansion turned Wonderland into the biggest DAO in the industry. Active treasury management created unique high yield strategies and token swaps which consistently outperformed the market and any competitors.

Building a large community through a unique minting mechanism, ideally positioned the DAO to obtain early stage token investments into a betting platform and NFT game as well as actively fund new products such as an upcoming Avalanche Liquid Staking product.

Before moving on lets reiterate the end goals of the two projects:

Abracadabra’s end goal: Become the most powerful Defi Entity and MIM being the most used currency. The stablecoin that is backed by lots of assets that everyone feels comfortable holding and using. Lots of people talk about “most used in crypto”, we are talking about most used in the world economy.

The end goal of Wonderland: Become the most successful DAO organized fund. Giving anyone the opportunity to be an investor, and allow them to get the upside of the economy.

So if we consider these end goals of the two projects, we come to the point that we are trying to make with this proposal.

The projects are stronger together than as individual projects.

Why do we believe this?

Without reiterating the points made above let’s take a quick holistic look at the products of the two projects. Abracadabra Cauldrons for minting MIM with Collateral. Wonderland a platform for investing and farming for yield. If you put these two together, you create a protocol that has a large amount of capital to make the asset MIM incredibly liquid, plus to make investments to increase the adoption, usage, and capital efficiency of MIM greater than any other competitor. This means that the governance token of Abracadabra SPELL is no longer only returning profits from its Cauldrons, but also becomes an asset that governs and grows its treasury. By becoming one Wonderland and its wMemo (and Memo/Time) holders now get exposure not ONLY to the treasury management of Wonderland, but also to the income of Abracadabra.

Due to this we would like to make the following Merge Proposal, we will go into the details of “how”, “Why”, “When”, and “What” below.

The Merge Proposal - AIP #6

TL:DR
The team proposal is to use 98B SPELL tokens, mostly minted from Abracadabra Treasury to acquire Wonderland Money Treasury in full and merge the two projects completely.

How?

Currently the tokenomics of Abracadabra are as follows:
63% (132.3B SPELL): Global Farming Incentives (13,991,260,380 burned over multiple times, Approximately 80 Billions still to be minted)

30% (63.0B SPELL): Team allocation (4 Year Vesting Schedule)

7% (14.7B SPELL): Initial DEX Offering

98 Billion SPELL, which is the equivalent of 784M MIM at the time of writing this proposal, will be used to purchase Wonderland treasury. 80B will be minted from the remaining LP allocation, while 18B will be loaned by Danielesesta and 0xMerlin.

If this proposal passes a tokenswap interface will be implemented on both Abracadabra and Wonderland Website to allow wMEMO (as well as MEMO) holders to swap their tokens for SPELL with a 0% slippage. We will provide tutorials on how to use it, if the proposal will pass.

The Treasury of Wonderland would then be given to the Treasury address of Abracadabra.
Everything else stays equal, Wonderland will still have the Wonderland fund page and brand, the community stays as is, except that the token is swapped. An important note is that, after the merge, Abracadabra treasury will still have some SPELL tokens as we will be purchasing also the wMEMO DAO allocation.

Why?

Yes, this is a big potential step for Abracadabra and Wonderland, but we would argue this is actually a big step for the overall Cryptocurrency industry. So Why does it actually make sense?

Abracadabra, one of the fastest growing Dapps on all data points of user adoption, and the absolute largest DAO in the space, merging together makes sense for the following 3 main reasons.

  1. Via this merger Abracadabra goes to 0 emissions, through this it becomes the first Dapp with a ton of adoption but at the same time with protocol owned liquidity. No Dapp will have this level of liquidity managed.
  2. Together Wonderland and Abracadabra outcompete a battle against the rich VCs who are currently fighting their own fight for domination. As separate protocols it would not be as efficient.
  3. Investments and acquisitions can be made in order to make the Frog Nation a true reality.

When?

As most of you probably know the whole world is going rather risk off than risk on. Meaning that it is a great time to be treasury rich in order to build lots and make investments. If you consider the cryptocurrency space, many teams start building slower as prices drop, as they think it is “all over”. We here are considering the exact opposite, with funds available and good products available. This is the time when winners win big! Distressed market opportunities become a reality, and through this merger decisions for long term and large growth can be made, now.

What could be achieved with the funds?

To start off with the assets that are in the treasury and would be transferred are in the following wallets:

Wallet 1: 0x78a9e536ebda08b5b9edbe5785c9d1d50fa3278c

Wallet 2: 0x1c46450211cb2646cc1da3c5242422967ed9e04c
Wallet 3: 0x355d72fb52ad4591b2066e43e89a7a38cf5cb341
Wallet 4: ​​0xb6b80f4ea8fb4117928d3c819e8ac6f1a3837baf

The wMEMO,MEMO,TIME that are held by the treasury would essentially become Spell tokens that the Abracadabra Treasury then holds.

As mentioned above acquisitions and investments could be done to make MIM the most used currency. From investments and acquisitions in the infrastructure space, derivatives platforms/protocols, crypto onboarding technologies all the way to investments in the non crypto space to bring MIM to fintech and more. Lastly of course as mentioned several times Abracadabra with these funds can go to 0 emissions as it holds and makes the markets of MIM liquid itself.

What Is going to happen if the proposal passes?

Soon after the proposal is on the forum, a snapshot vote will be created. sSPELL holders will be asked to vote upon it, and after that a decision will be taken.

If both Wonderland and Abra proposal were to pass, 80B SPELL will be minted, and SPELL farming, bribing and emissions in general will stop as soon as the liquidity is migrated successfully, and the new situation is fit to go to zero emissions.

In order to cover these further expenses, SPELL used to purchase Wonderland DAO allocation will be used.

A Tokenswap interface will be implemented on both websites, and tutorials on how to use it will be provided in a timely fashion. It will be happening on AVAX. It will be extremely straightforward, and it will allow you to lock your wMEMO tokens in a contract, and receive SPELL in your wallet. Stay tuned on our medium for more info.

Further plans on how to deal with wMEMO CDPs are currently being discussed, but one main point will be that users will be able to close the positions at their own pace, without any need to migrate. Closing your position will return SPELL at the determined migration exchange rate. More information about that will be coming soon!

The link to the snapshot will be edited here.

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15 Likes

TLDR : The team proposal is to use 98B SPELL tokens, mostly minted from Abracadabra Treasury to acquire Wonderland Money Treasury in full and merge the two projects completely.

im really scared from this , what is the difference between here and when a bank saves an hedge fund that is collapsing ? :atm: :atm: :currency_exchange:

but i trust the team and im sure if they proposed this , it’s because is the best thing to do , faith in you , hope the best for all :frog:

1 Like

This is definitely the way. The synergy of all the projects are slowly starting to come to life. dont underestimate how bullish this is.

6 Likes

No.

  1. I like the risk/ reward characteristics of Abracadabra not of Wonderland. Keep them separate as they have different businesses models. Synergies for Abracadabra are negligible.

  2. Wonderland appears to experience stress. Valuation needs to go way down if Abracadabra token holders need to bail them out.

15 Likes

No. 98B $SPELL is way too much.

12 Likes

I’m concerned that Daniele and Merlin would even put forward a knee jerk proposal like this…

I own sSpell to have exposure to Abracadabra lending and leverage. I DO NOT own sSpell to prop up a failing Wonderland. “Acquisition” of Wonderland is a dilution of $spell.

I own wMemo to be part of Wonderland. Don’t merge the two to “save” the one. Frog nation will make mistakes (Wonderland current situation.) Please don’t let one failure be the downfall of profitable projects with a strong future.

26 Likes

I vote a big NO on this proposal. The two projects can work together in tandem and so I don’t see a need for this merger. Wonderland can receive the liquidity incentives that Abra is paying out. Diluting SPELL holders with 80 billion more tokens to buy Wonderland isn’t what I signed up for.

17 Likes

There is no way to justify acquisition of a $800M treasury by diluting the $SPELL supply with 98B $SPELL (Circulating supply increase of +120%!). This seems like a poor attempt at saving Wonderland at the cost of $SPELL holders, and I can see that the market is not taking this proposal well. No support.

11 Likes

@0xmerlin quoting a post of yours, you said “After talking to Sifu”.

This didn’t age well. You almost gave a repeat felon and known criminal access to the $spell ecosystem. In light of recent revelations, please pull this proposal and insulate your investors from Wonderland before $spell goes to 0

1 Like

This has been the 2nd attempt to merge projects that the team is involved in. If the team keeps pushing these proposals, investor confidence in Abra would pale. I know damn well that my confidence in the team has been diminishing ever since the popsicle thing came out. Mergers shouldn’t be a knee jerk reaction and should have a clear defined benefits for both protocol which justifies the amount which I don’t see here or in the Popsicle merger that was proposed a while back. The bar hasn’t been met in both proposals.

3 Likes

The 800m to be acquired are valued assets. Stables, BTC, ETH, ICE, FTM, SPELL, ICE, CVX
All of these would be put to work to generate fees on top of Abra Revenue.
They’re is a dilution/split but the value being added surely out weighs this.

5 Likes

An increase of $SPELL circulating supply by +120% would lead to a drop of 1 - 1/(1+1.2) = 54.5% in staking rewards from Abra’s business model if this newly distributed $SPELL is staked proportionally. So no, the value being added surely does not outweigh the dilution.

6 Likes

Timing of this proposal couldn’t be worse, and it’s not a good look for us. It looks like a bail-out for Wonderland users, but the timing is off, and I’m scared it will push the prices of both Wonderland and Spell down more.

We can form this proposal in a very simple way as well:

  • is the community up for Abaracadabra to use all its remaining SPELL to market buy BTC, ETH, AVAX dip?

That is basically what we are doing here isn’t it?

Positives :

  • we are quite possibly buying the market bottom
  • we have no slippage in 800mil purchase of these assets with SPELL, which let’s be honest isn’t realistic if we would do it on a open market

Negatives:

  • we are putting all our eggs in one basket here
  • we are doing the purchase on very low SPELL valuation - current price of SPELL is also a market bottom (at least I hope so).

My opinion is that we already have a good product here (Abracadabra lend/borrow protocol) and it is better for us to invest SPELL into other up and coming products (like proposals we had to buy liquidation protocol and option protocol), that can do 100x with our community backing and usage. Considering the investment sizes, for 800mil USD we could diversify our investments this way into 100 projects at least.

I’m against using all our SPELL to market buy BTC, ETH and AVAX.

13 Likes

Unfortunately, the 0 emission phrase in this proposal feels like cheating to me. sSpell stakers would have gained considerably more Spell over the next years, comparing to just minting all remaining SPELL at this point.

Wonderland’s $700M TVL vs Abracadabra’s $5B is not a real deal or impact. It would be purchased at the expense of SPELL holders. In addition, simply buying >50% TIME tokens to control the protocol would be much cheaper than purchasing the TVL. (TIME mcap < $500M vs Wonderland TVL approx $700M).

6 Likes

The UST degenbox strategy in wonderland yields about 140k per day. What if this could be used as a buyback and burn. Essentially producing a road map until the circulating supply is back to its original state ?? just a thought or something along those lines. Using the yield bearing assets.

1 Like

The treasury also creates sizeable returns.

2 Likes

Is it possible to put a list with the tokens we will be buying but not in terms of usd, just raw amounts? I think that would be best for the sake of transparency

Returns are not guaranteed here. What if we enter a bear market cycle for year and half?

As said previously, I’m fully supporting investment in other projects/protocols, but this is a basic market buy of assets for treasury, not purchasing a part in promising new dapp/idea/protocol.

4 Likes

The size of the proposed transaction is significant for the protocol. Can the team provide more detailed information to properly assess the proposal?

Ie.

  • Valuations
  • Dilution effects
  • Anti dumping mechanics
  • Expected return of the transaction

Abracadabra tokenholders are asked to absorb significant risks. Let’s not rush this.

Is this really the best use of treasury funds?

3 Likes

Right. But those that want to invest in the returns of a treasury can buy $time.

The concern here is that the proposal forcibly and fundamentally changes the investment thesis for $spell and dilutes the token to acquire the assets of a crumbling Defi experiment

12 Likes