There’s been a lot of pumping, dumping and discussion about these “community” projects lately, so let’s introduce them, look at their treasuries, and finally question their value proposition.
Introduction
Wonderland
Wonderland is a fork of Olympus DAO by @Danielesesta that has received a lot of attention lately, thanks to:
- the astounding amount of funding it has collected by the crypto community through the $TIME token
- the latest developments of $wMEMO and #Solidly ve(3,3) - together with @AndreCronjeTech
- the recent huge dump of their market cap (aprox -85% from ATH combining their tokens vs. -50% of the total crypto market)
Olympus DAO
From their docs, “Olympus is a decentralized reserve currency protocol based on the OHM token. Each OHM token is backed by a basket of assets (e.g. DAI, FRAX) in the Olympus treasury, giving it an intrinsic value that it cannot fall below.”
The recent dump was basically the same (-85% in aprox 2 months).
Treasury balance
As both declare themselves “reserve currency protocols”, we should check what tokens do they hold in their treasury wallets and compare the value of their reserves to the declared treasury value and their market valuation, in million dollars (M$).
Keep in mind that we should exclude the value of tokens created by each protocol, as we cannot consider themselves “reserves”.
Wonderland
These are their treasury wallets, as stated in their docs:
0xb6b80f4ea8fb4117928d3c819e8ac6f1a3837baf
0x355d72fb52ad4591b2066e43e89a7a38cf5cb341
0x1c46450211cb2646cc1da3c5242422967ed9e04c
0x78a9e536ebda08b5b9edbe5785c9d1d50fa3278c
Olympus DAO
Their treasury wallet, as stated in their docs is: 0x31f8cc382c9898b273eff4e0b7626a6987c846e8
I also found DAI in their AAVE allocator:
0x0e1177e47151Be72e5992E0975000E73Ab5fd9D4
All other address listed in their docs are empty or hold minimal amounts of non-OHM
Recap and questions on the value proposition
As you can see and verify yourself, the reserves’ $ value are much lower than what is declared, and even lower compared to the current market cap (yes, even after the recent 85% drops).
As of 2022-01-26 (values may differ depending on the time you read this):
Wonderland:
Market cap (TIME+wMEMO) = 493 + 253 = 746M$
TVL by Coingecko (Total Value Locked) = 260M$
Declared Treasury balance = 714M$
Reserves = 243M$
Fractional reserves = Reserves / Declared Treasury = 243/706 = 1/3
OlympusDAO:
Market cap = 628M$
Declared TVL = 522M$
TVL by Coingecko = 252M$
Declared Treasury balance = 533M$
Reserves = 100M$
Fractional reserves = Reserves / Declared Treasury = 100/533 = 1/5
So why the difference? The difference is due to the market value of the tokens minted by each protocol, that basically corresponds to the credit that the investors are giving.
You could say that Wonderland’s investors are currently expecting the protocol and it’s members to create 3 times the value of the reserve assets in the future; 5 times by Olympus DAO. At their ATH (All Time Highs of their tokens), 2 months ago, the multipliers were around 5 and 30 respectively, assuming their reserves were hold in the same tokens.
I don’t want to cause a bank protocol run: keep in mind traditional banks in the US have a reserve requirement of 1/10 to 1/33, depending on how big they are.
What I would like to point out is that if we are building (and owning) the banks of the future we should at least learn how they work (Trust, but verify).
We pose some limitations on what traditional banks can do with our money and credit, and we expect a business plan for every investable public business.
So what is the value proposition of Wonderland and Olympus DAO?
Assuming they are just a new form of banks, do we have any business plan for attracting more funds and creating more credit? How will the treasury contract owners use our tokens to create 3 to 33 times the value in USD?
Please reach me on Twitter @kopeboy for a beneficial discussion. Thank you.