Disclaimer: Your funds are your responsibility. All information in this article is reflecting my own investing strategy and should not be taken as financial advice.

After only a few months of falling prices in the crypto markets, Wonderland seems to be preparing to cast a Spell that will save Time holders. A new proposal has just been submitted for voting on the forum and if it passes Spell holders will probably have the time of their lives.

How Did We Get Here?

I already wrote about the issues with DeFi 2.0 but here is a quick TLDR for those that aren't familiar with the situation.

Over the past few months, OHM and OHM forks like Wonderland have been struggling to keep the token price stable. Wonderland currently offers over 80,000% returns on $Time staking which should give you an idea of why the price keeps plummeting.

As people keep selling the tokens they earn fairly easily they push the price down but this causes an even bigger problem. Many $Time stakers have taken out loans using their staked assets as collateral. Sharp price corrections trigger liquidation events where liquidators that repay the loan get $Time tokens in return and keep selling them to repay even more loans.

This double selling pressure is met by buybacks using Wonderland's treasury but with every buyback, the treasury gets smaller and the floor price of the $Time token is destined to reach new lows.

Without the decrease in APY this will continue happening and undoubtedly push $Time below the base price consistently. That seems to be the main reason for the proposal I mentioned above and that is also the most interesting part in this whole situation.

Where Are We Going?

Here are a few quotes from the proposal before we continue:

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, including Sifu and Dani, see considerable synergy in merging the two protocols together under one token - SPELL.

The merger would bring Wonderland’s large treasury worth +$800M USD in tokens over to Abracadabra, including making use of Wonderland’s valuable strategy of protocol owned liquidity, completing its goal of becoming self-sufficient and a zero-emission protocol by eradicating the need of incentivizing liquidity.

The merged Wonderland community and token holders will benefit from holding the SPELL token, which will in addition to receiving their rewards from cauldron fees, also start receiving revenue share from the treasury which boosts the APY on sSPELL.

Every wMEMO token represents ownership over a part of the Wonderland Treasury. The merger involves the Wonderland treasury being acquired by Abracadabra.

This means that wMEMO holders will change ownership from Wonderland to Abracadabra by exchanging wMEMO to SPELL.

Core developers are pushing for a merger between Wonderland and Abracadabra (the protocol behind the MIM stablecoin) and the way I am interpreting this is fairly simple - They have both concluded that even removing discounts for bonding and proceeding to buyback every dip won't stop Time from taking a nosedive. The APY is simply unsustainable and no matter how hard you try 84k% APY will have to cause massive dilution over time.

With all the ups and downs Wonderland has encountered in the past few months I still think that the main developers will do their best to save early Time investors and compensate for their losses somehow but in every disaster there is opportunity and this one is just too good.

Profiting From Chaos

After reading through the proposal and following the overall sentiment of the community I think this one will be an easy pass. People are pissed, especially those that got in at the $8k price range. At this point, I am sure they are willing to do anything to try and save their investment by uniting everything under one token - Spell.

If and when this merger happens all Memo (staked $Time) tokens in existence will be converted into Spell. However you look at it, this will be the largest buyback event in DeFi, unless Memo becomes completely valueless before they pull it off.

I'll just leave this chart here and let you think about what would happen to the price if and when the conversion process begins.

I'm personally converting all Time-related assets to Spell asap but as always, you do you.

Posted Using LeoFinance ^Beta