January 31, 2022: Expecto Patronum 🐸🛡️
Abracadabra Scavenges Defunct DAOs, Plans $CRV Acquisition
Wonderland is officially shuttering following a signal vote.
Wonderland is dead… all hail Wonderland?
Bringing its strongest “no-means-maybe” energy, it appears as if Wonderland will try and have it both ways. Wind the project down, but still offer another ride to those craving a second spin on the still blood-spattered roller coaster.
The vote was hardly the clearest signal. A “YES” vote would have wound the project down by concentrating control over the coveted Wonderland treasury to the benefit of a few whales. Consequently, a populist “NO” movement sprang up, making bedfellows of both the frogs who wanted to keep the project going, as well as those who wanted the project to die via different mechanics.
Hence the complaints that the “50/50” vote was as balanced as its Curve $MIM pool.
In the end, the community got its NO vote, but perhaps the worst of both worlds. The response suggests the losing YES voters may still get the treasury anyway, with the “victorious” NO voters mostly getting more drama. We don’t know if the vote would pass the Jimmy Carter sniff test, but at this point what would you expect out of Wonderland?
Sifu voted NO, for the record. ✊
Although Wonderland is what it is, the other pieces of Abracadabra’s kingdom ($MIM and $SPELL) are considerably closer to recovery. Abra got bloodied considerably by association, but survived the weekend and came back punching.
Yesterday they posted their Expecto Patronum plan, which immediately is familiar to readers of Harry Potter.
The end goal is to have deep, self sustainable liquidity, without having to rely solely on LP actors. This means that Abracadabra actually focuses on supporting the largest and most stress tested Stablecoin DEX that exists: Curve Finance.
Not however via the hyped “Curve Wars”
Say what?
Their plan is to hoover up treasury assets from any number of other dying DAOs, including Wonderland and several other defunct OHM forks. Suddenly it starts to make sense why Wonderland is keeping its mittens on its treasury. Wonderland holds about 10% of the DAO-owned $CVX among other assets.
Per this newest proposal, Abra is offering up to 30B $SPELL and with plans to acquire roughly $250M of treasury assets across multiple dying DAOs. Holders of Wonderland’s $wMEMO (“wrapped memories”) would be able to trade in their tokens for $SPELL.
If the proposal passes, we’ll see Abracadabra allegedly stop the dilution of $SPELL (though I’m not sure if anything stops them from simply restarting $SPELL emissions in the future, but we’ll disregard that). Previously Abracadabra was minting substantial amounts of $SPELL to bring billions in liquidity to its Curve pools.
This was costly, but had Curve pools not held the $MIM peg so well under extreme tension, Abra may well be facing bankruptcy discussions of their own at the moment. Instead, the proposal asserts their intentions to acquire a substantial amount of $CRV with the assets they accumulate.
This reopens an old front in the Curve Wars. Lately the battleground had mostly shifted from Curve to Convex. Amidst the distraction of the Convex Wars, Abra is launching an assault straight at the source. They would use the veCRV they acquire to directly incentivize their $MIM pools and the $SPELL-ETH v2 pool.
This would take Abra out of the $SPELL bribe game, instead focusing on directly acquiring as much $CRV as possible. In this manner we observe how the existence of Convex balances Curve — if Curve ever gets too cheap, protocols can opt to skip the bribe game and just buy $CRV directly.
Many parts of the plan lack specifics. They also announced plans for their own wrapped version of $CRV called “magic CRV” ($mCRV). In the past, wrapped CRV has been difficult to keep pegged, and it’s not immediately clear where this fits into the plans. Presumably they have some plans to launch $mCRV as a mechanism to attract CRV into their system similar to $cvxCRV, since a direct buy of ~$250MM might be difficult to pull off.
It’s possible the declaration is merely C-suite politicking. Much of the Abracadabra multisig is controlled by Abracadabra directly, so saying nice things about Curve may simply be lip service to shore up voting power. We’re not privy to the inside baseball so we can only speculate.
Given the behavior of Wonderland, this proposal may be the best available exit for users who just want to wash their hands of the whole affair. Without this proposal, it’s not clear what value the users’ wMEMO will otherwise have. Then again, the Wonderland treasury has real value, and it’s conceivable protocols who covet $CVX might make their own counteroffers.
The forum comments are contentious, as one might imagine given that tempers are boiling across Frog Nation. Some commenters have noted the proposal looks to be a rehashed version of a recent merger proposal.
We’re not necessarily endorsing the proposal because we still know too little about the Abra ecosystem, but we think it merits serious consideration. We have no stake in Wonderland, but if we did we’d be inclined to take any opportunity to get out, and this looks to be drafted with appropriate consideration of all stakeholders’ incentives in mind.
For Abracadabra, the game theory is strong. In one move, Abracadabra strengthens its tokenomics, gets a stash of income producing assets for its treasury, and shores up liquidity for its critical Curve pools. The design appears to have flipperprints all over it. Perhaps rumors of the Tetrachungus’s demise were premature?
The Curve Wars represent the future of finance, so it’s no wonder the stakes are high. If we had to guess, we’d imagine the battles will only escalate as protocols start to recognize the money sitting on the table for offering Votium bribes, as well as the importance of self-rebalancing v2 pools immune to crashes.
Again though, we know Curve, not Abracadabra. If you’re a member of Frog Nation, drop your thoughts (or any corrections) in the comments!
Disclaimers! Author has some exposure to $MIM, some unclaimed $SPELL, little time, and no $TIME.
There's a community proposal to take over the treasury with a more serious and institutional grade governance structure
https://mobile.twitter.com/0xHedgehog/status/1488146130990948361