The result of the drama around @danielesesta and his protocols?
A proposal has been put in place to merge $SPELL and $TIME into one protocol.
Whether you hold $TIME or hold $SPELL, here's what you need to know and whether or not it's viable.
(thread👇)
A proposal has been put in place to merge $SPELL and $TIME into one protocol.
Whether you hold $TIME or hold $SPELL, here's what you need to know and whether or not it's viable.
(thread👇)
To get you up to speed:
$TIME is the largest $OHM-fork by Mkt Cap. It has been used as a playground for Daniele (Dani) Sestagalli's VC ambitions and more 'creative' ideas.
It previously offered 5-figure APYs to stakers. But now trading below its treasury value, it's in turmoil.
$TIME is the largest $OHM-fork by Mkt Cap. It has been used as a playground for Daniele (Dani) Sestagalli's VC ambitions and more 'creative' ideas.
It previously offered 5-figure APYs to stakers. But now trading below its treasury value, it's in turmoil.
Abracadabra Money ($SPELL) is a lending platform that lets users take out positions against crypto collateral and yield-generating positions.
This allows users to take out loans that pay themselves off.
These loans charge interest & get liquidated, fees go to $SPELL holders.
This allows users to take out loans that pay themselves off.
These loans charge interest & get liquidated, fees go to $SPELL holders.
Dani and other team members have also taken out loans against their $wMEMO using $SPELL, meaning they can 'cash out' without actually selling.
If they get liquidated, they still have the money from the loan that they took out.
If they get liquidated, they still have the money from the loan that they took out.
https://twitter.com/AstrologyCrypto/status/1486164381071470598?s=20
This strategy was exposed on Twitter, causing $TIME to crash below the value of the assets in its treasury.
Buybacks are supposed to be in place to keep token price at treasury value no matter what.
That didn't happen & devs were silent, leading to accusations of a 'soft rug'
Buybacks are supposed to be in place to keep token price at treasury value no matter what.
That didn't happen & devs were silent, leading to accusations of a 'soft rug'
Dani was absent during the drama, but fired back with an admission that $TIME buybacks are not working as expected and a plan to fix $TIME and bolster $SPELL simultaneously.
This proposal, called AIP #6 sets forth a potential merge of $SPELL and $TIME.
This proposal, called AIP #6 sets forth a potential merge of $SPELL and $TIME.
https://twitter.com/danielesesta/status/1486299532975611906?s=20
How would this happen? A complete buyout of $TIME using $SPELL
Current coffers:
• 132.3B SPELL: Global Farming Incentives (14 b has already been burned, 80 b to be minted)
• 63.0B SPELL: Team Allocation (4 Year Vesting)
• 14.7 SPELL: Initial Sale
Current coffers:
• 132.3B SPELL: Global Farming Incentives (14 b has already been burned, 80 b to be minted)
• 63.0B SPELL: Team Allocation (4 Year Vesting)
• 14.7 SPELL: Initial Sale
The proposal would work as following:
The remaining 80b $SPELL from the farming incentives would be minted, and 18b would be loaned by Dani Sesta and 0xMerlin (cofounders of $SPELL) to buy out $TIME holders.
The remaining 80b $SPELL from the farming incentives would be minted, and 18b would be loaned by Dani Sesta and 0xMerlin (cofounders of $SPELL) to buy out $TIME holders.
A tokenswap interface would be set up so that TIME/wMEMO/MEMO holders could swapped directly for $SPELL tokens .
The final step: the $TIME treasury gets transferred to Abracadabra.
So if the trade goes through at the treasury value of Wonderland Finance, it's a fair swap.
The final step: the $TIME treasury gets transferred to Abracadabra.
So if the trade goes through at the treasury value of Wonderland Finance, it's a fair swap.
The Logic:
• $SPELL purchase the treasury of $TIME for its asset value (break even for both protocols)
• $TIME holders get to exit for the treasury value (break even for $TIME holders)
• $SPELL arrives to zero token emissions and gets the treasury (good for $SPELL)
• $SPELL purchase the treasury of $TIME for its asset value (break even for both protocols)
• $TIME holders get to exit for the treasury value (break even for $TIME holders)
• $SPELL arrives to zero token emissions and gets the treasury (good for $SPELL)
To do this, though, new $SPELL tokens have to get minted.
Where do these tokens come from ?
Primarily from farming rewards. If this proposal goes through, no more rewards to Liquidity Providers, so no more emissions either.
Something $SPELL has been working on for a while.
Where do these tokens come from ?
Primarily from farming rewards. If this proposal goes through, no more rewards to Liquidity Providers, so no more emissions either.
Something $SPELL has been working on for a while.
How do emissions go to zero? Protocol-owned liquidity.
The protocol itself (using that new treasury) becomes a liquidity provider for itself.
No more bribing or farming emissions, any fees from the LP position go back into the $SPELL treasury.
The protocol itself (using that new treasury) becomes a liquidity provider for itself.
No more bribing or farming emissions, any fees from the LP position go back into the $SPELL treasury.
Lastly, this treasury will still be used to make strategic investments, as $TIME hoped to do originally. So there will still be an investment DAO component.
It'd definitely be an improvement for $SPELL, because it'd be the first protocol that combines $OHM mechanics (Protocol-owned liquidity)with an actual viable product.
Hypothetically, the plan is valid. There are some issues, though, in reality:
• Protocol-owned liquidity can lose value if token price tanks
• $TIME might trade around treasury value, leading to an unfair price on either side
• Not $TIME will be redeemed for $SPELL,
• Protocol-owned liquidity can lose value if token price tanks
• $TIME might trade around treasury value, leading to an unfair price on either side
• Not $TIME will be redeemed for $SPELL,
The biggest flaw I see is that even though $SPELL gets backed by treasury assets, the token supply increases, which is revenue-dilutive to current holders.
Revenue right now is distributed across the 80 billion token holders, it will be diluted by 2x.
Revenue right now is distributed across the 80 billion token holders, it will be diluted by 2x.
It will be interesting to see how this plays out, if nothing else.
You can read the proposal here:
forum.abracadabra.money/t/aip-6-abra-t…
You can read the proposal here:
forum.abracadabra.money/t/aip-6-abra-t…
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