Wonderland DAO is having a vote to dissolve the protocol and return the treasury back to its token holders. This is quite the reversal for the popular protocol that grew its Treasury to over $1 Billion. However, after days of controversy and rumors, Wonderland’s token price is hovering near all-time-lows right alongside the reputations of the entire dev team.
Consistent with that theme, the proposal to dissolve is generating its own string of controversy. Lack of details, unfair treatment, broken promises, and rumors of more predatory actions are all on the table.
Recap: Frog nations Last 4 Days in Wonderland
Frog Nation has been in shock over the last 4 days as news of its leader Daniele Sesta & team keeps coming out. To recap for those who spent the last 4 days disconnected from crypto:
- First, news broke that Wonderland’s founder Daniele Sesta was liquidated on his own $wMEMO loan position. Rumors swirled that he may have purposely allowed the liquidation to have plausible deniability while taking money off the platform.
- With $wMEMO in freefall, $TIME was running out and a proposal to merger Wonderland with Abracadabra was floated . The merger (bailout?) details were sparse and caused a turmoil between the 2 protocols of Frog Nation.
- However, all this would immediately be overshadowed after the Wonderland CFO, Sifu, was doxxed as Omar Dhanani. Dhanani, aka Michael Patryn, is a known conman who has charges for running a credit card fraud ring, burglary, grand larceny, and multiple criminal computer frauds. He is most well-known for the QuadrigaCX scam in Canada where him and his partner made off with almost $170 million.
- Daniele admitted to finding out Sifu’s identity months ago. This raised questions over how he could keep a notorious scammer in charge of a $1 Billion Treasury.
A Vote to Remove Sifu aka Dhanani aka Patryn
A vote is currently wrapping up to remove Sifu/Dhanani/Patryn from his role of CFO. Thankfully, it appears like this will pass and Sifu will be removed.
Sifu was also a multi-signer on the Abracadabra multi-sig and has allegedly been removed off that wallet as well.
But the removal of Sifu is not without its own controversy. Previously Daniele & Sifu had promised to repay anyone liquidated below their liquidation price on $wMEMO. The 2 founders had stated Wonderland would support the $wMEMO share price with buybacks below backing. This pledge encouraged users to take modest leverage against their positions. When Wonderland was unable to keep the price pegged to backing, many holders were liquidated. The money to repay those liquidated was allegedly coming from Dani & Sifu’s personal wallets.
Now that Sifu is being removed, is he still going to honor the verbal agreement and help make liquidated members of Frog Nation whole?
[Note: There is not clarity on whether the money to make liquidated Wonderland users whole was coming from Dani/Sifu or the Treasury. It has been implied both ways by Dani]
Proposal to Wind Down Wonderland and Return Treasury to $wMEMO
The Wonderland forum has a proposal to wind down Wonderland and return the Treasury to $wMEMO holders. You can read the full proposal here, but it is fairly sparse on the details so far. However, I’ll highlight some of the important parts of the current proposal for discussion.
The current proposal says “Winding down will mean giving every wMEMO holder back the funds from the treasury that they are entitled to and declare the OHM Fork experiment closed.”
If Frog Nation votes no, and “and no counter proposal within 5 days is made by the community with relevant people who are willing to take over the multisig and willing to take on this challenge, we will still unwind the treasury.”
The vote on the future of Wonderland will be “a snapshot vote” that “will start exactly 1 hour after the Sifu proposal has finished.”
The commenters have found a lot to dislike in the above proposal.
The $wMEMO Snapshot Date is in the Future and Preannounced
Preannouncing a future snapshot gives the opportunity for whales to come in and buy up $wMEMO for cheap now. Retail who purchased at higher prices and lost money in the recent price freefall will have a much smaller portion of the treasury than those who buy the same $ amount today.
This is exacerbated by the small retail investor not having additionally money to add at this point after seeing their investment tank.
Additionally, the recent liquidation cascade liquidated many investors. Remember that Wonderland was supposed to use the Treasury to prevent the price from falling below the backing. These users were never supposed to be liquidated if Wonderland acted as it said. To add insult to injury, these users would all be left out of the proposed future snapshot as well.
A more fair move would be putting the snapshot before any of the recent events to capture those who supported the protocol. There was a recent snapshot taken for an alleged upcoming airdrop that could be used for instance.
Commenters are claiming this seems like another payoff to insiders & friends who can buy up $wMEMO now and get a higher value from the Treasury.
What is the True Treasury Value of Wonderland?
Wonderland still has not produced an audit of its Treasury. The Treasury held many $TIME, $wMEMO, and $wMEMO LP tokens as well as the investments Wonderland made in other protocols during its short “VC” stint. Tweets from Daniele have said these will not and/or are not currently counted in the Treasury.
Additionally, a known swindler was just the CFO who was moving $wMEMO around numerous wallets, so there is always an outside chance of theft already occurring.
It will be very hard to make an informed vote without an exact number of the backing value. Also, knowing what the mix of coins end users are going to get would be helpful.
Are Any Wallets or Insiders Excluded from Wonderland Treasury Payout?
Dani, Sifu, and team have been getting the large founders distributions from the Treasury for the entire experiment. They have massive amounts of $wMEMO in their wallets. Are they going to take a proportional cut of the Treasury?
This has been referred to as the ultimate end rug. Now that Dani & team have a much less valuable $wMEMO as their pay, they instead dissolve the protocol and pay themselves out with the more valuable Treasury.
Commenters have noted that despite the dev team doing a fair amount of selling under the guise of “paying dev salaries”, they couldn’t dump all their coins. By dissolving the protocol, they get to get instant liquidity they didn’t have before.
Five Days is Unrealistic Time for An Alternative Proposal
If the proposal is voted down and Wonderland continues on, they are only giving 5 days for a counter proposal and then the protocol gets dissolved anyway. That is a miniscule amount of time for a bunch of anonymous strangers to come together and agree on a path forward. Especially since the request is to have agreed upon names to take over the multisig wallet.
Clearly, Dani & team want to distance themselves from Wonderland in a hurry. This arbitrary deadlines only feasible purpose is to force people to vote to wind down Wonderland. If the vote passes to wind down Wonderland, Dani & team can point to ‘honoring the community vote’ and pretend they did it for the community.
However, this absurd timeline spawned my personal favorite comment on the forum. A user proposed that everyone votes down the proposal and then get lawyers on the multi-sig. Then use the entire treasury to go after Dani, Sifu, and team.
Wrapping up: Is this the End of Wonderland?
Voting starts soon for the future of Wonderland. It is unclear whether any of the concerns brought up by $wMEMO holders will be addressed before the vote happens. There doesn’t seem to be any effort being made to adjust the proposal based on community feedback.
Lastly, there is ongoing controversy with Daniele Sesta and Team, including rumors of ties to the ‘Ndrangheta Mafia and using the protocols solely for money laundering purposes. People are asking questions around his previous protocols, the popsicle hack being an inside job, and who other people in his inner circle are (like OxMerlin).
Sifu is now popping up and rumored as being involved with other protocols that have made promises of airdrops and locks and haven’t delivered. He has also being rumored as a seed investor & advisor in many protocols and holding large amounts of coins.
Also it has been speculated that Sifu being free from all his previous convictions as a sign he is working for the government. This whole Wonderland fiasco could be a scheme to invite more regulation and Sifu as the undercover.
Wonderland may be out of $TIME, but there is likely more to come for Frog Nation, Dani, Sifu, and many DeFi protocols they are involved in.