Welcome to this post, where we are going to see how Wonderland works and everything you should know if you want to use this platform. Being one of the first platforms to achieve top 100 market capitalization on the avalanche network, Wonderland has become very popular because of how it works.
Wonderland is a different way of incentivizing liquidity providers with a model that reduces risk by having an amount behind each token, making it impossible for your cryptocurrency to be worth 0.
Its great growth has been due to the high % it offered and continues to offer, at the same time that the cryptocurrency continued to appreciate in price, instead of falling, as would be logical as it is a cryptocurrency with a high inflationary tendency.
What is Wonderland
Wonderland is a fork of Olympus, a very similar if not identical protocol on the ethereum network. With the success that Olympus has had and is having on the ethereum network, Wonderland launched the fork on the Avalanche network, to offer the same that could be found on the ethereum network, on this new network, and with a great growth in a very short time.
It is the first decentralized reserve currency protocol available on the Avalanche Network based on the TIME token. Each TIME token is backed by a basket of assets (e.g., MIM, TIME-AVAX LP tokens, etc.) in the Wonderland treasury, giving it an intrinsic value below which it cannot fall. Wonderland also introduces an economic and game-theoretic dynamic to the market through staking and minting.
If you have been in DEFI for any length of time, you will have seen high % platforms, which all they do is create more tokens to attract high % investors, and the value of their token ends up at 0 or dropping in a short time 99% of its value.
Olympus and Wonderland being its fork, raises a different way to continue attracting investors with high %, without the token being worth 0, thanks to having an amount of cryptocurrencies as a base that users contribute, in exchange for buying the token cheaper, as if it were a discount. These tokens serve as a guarantee so that the cryptocurrency, despite being highly inflationary, always maintains a minimum value. Currently, the amount it is backed by is about 14% of its value. Meaning that if TIME were to start falling in price, it would never fall below 14% of its value. For example, if TIME is worth $1,000, each TIME will be worth at least $140 approximately.
How to Buy Wonderland (TIME)
To use the platform, the main thing you will need is Wonderland (TIME) to stake it and receive the rewards it offers. To do this, you must use trader JOE, and the avalanche network in metamask. If you are totally new, I leave you a guide here so you can know how to buy Wonderland and then see how the other aspects work.
The main and most used function is the Wonderland stake. If you click on stake, in APR you can see the annual % they are currently giving. In TVL the amount of staking, and current Index is the amount you would have gotten if you had staked Wonderland from the beginning. If the Index is 3, it means that you would have 3 times more. You can use this as a reference, when you want to withdraw your TIME, you can subtract the current Index by the Current Index of when you staked it, and see what you have earned.
To stake it, simply indicate the amount, if you want all of it click on Max, confirm in your wallet and that’s it. You will now have your TIME staked. Below, you can see the next reward, and the return on investment in 5 days that you will receive. Also, at the top, you can see how much is left for the distribution of the new rewards in the next rebase.
At any time you can stop staking your TIME in unstake, indicate the amount, confirm in your wallet and you will have your Wonderland tokens with what you have generated during that time.
When you stake your TIME, you will receive another cryptocurrency called MEMOries, which has a 1:1 ratio with TIME, and you will need it when you want to stop staking your TIME in Wonderland. You can use your MEMOries in other platforms to get a higher % of profitability, like in abracadabra as collateral to have MIM.
Mint allows users to mint TIME from the protocol at a discount by trading either i) liquidity (LP tokens) or ii) other assets such as MIM. The former is called liquidity minting and the latter is called reserve minting.
The minting action creates tokens that take approximately 15 epochs or so to vest, and TIME tokens vest linearly to the user over that period. Liquidity minting helps the protocol accumulate and lock liquidity within, while reserve minting allows the protocol to grow its treasury and thus grow the backing by TIME.
Currently, you can use wAVAX, MIM, TIME-AVAX and TIME-MIM to mine TIME. Keep in mind, this is a very different strategy than staking, where you stake to generate an annual %, and is more of a long term approach. With Mint, it is a short term strategy, where you will be able to buy TIME for a discounted price after the indicated period of time, usually after 5 days. This means that if you want to mint, the strategy is to buy at a discount and sell it later, or stake it if you think it will continue to rise.
Once the 5 days have passed, in reedem you can withdraw the amount of TIME in exchange for the amount you placed in Mint. In mint, before confirming, you will be able to see the amount of TIME you will receive, the current price of TIME and the price of Mintear, as well as the annual % you will receive.
After seeing how the protocol works, it is important to know the risks to which you are exposed when using Wonderland. The first risk is that it is a very new protocol, even though it is an Olympus fork, the team and the whole platform has only been in place for a few months. In addition, there is currently no external audit to verify that there are no bugs. Although if it is a fork of olympus, and olympus has not been hacked, it should not be hacked either.
The system of incentivizing staking, while having a very inflationary token, is a fairly new model and game theory, which, for the moment, seems to work, but there are several risks that are important to consider. The first, is the price drop, which at some point or another will occur, due to the high inflation that this model has. The second, is the annual %, as long as it is high and compensates the price drop, it can be profitable, but it is possible that the annual % you receive for staking drops to very low %, and that it barely compensates the loss of value of the cryptocurrency.
Actually, this protocol together with olympus and other forks, plant a balance model, between high annual % received on a very inflationary token. As long as the protocol manages to maintain a balance between high annual %, interest in cryptocurrency mining to provide liquidity, and price, it can be a very successful protocol. But this will depend on the team that manages to balance the variables to make it a protocol with a future.
I hope it has helped you to know more in detail how wonderland works and how to use the platform. Remember that if you don’t have an account with binance, you can create one just below.