[RFC] Periodic Treasury Reporting

[RFC] - Periodic Treasury Reporting:

  • Yes, transparency is important and will attract investors
  • No, I’m sure it’s fine

0 voters

Name: [RFC] - Periodic Treasury Reporting

Scope: Given the frequent questions that surround the size and composition of the treasury, the discrepancies between holding in Debank/Zapper vs the dashboard, the fluctuations in the backing price, and the importance of treasury performance to Wonderland’s value proposition, the DAO should issue regular reports on the composition and performance of treasury assets.

Link to previous [DAO Discussion]: This has been posted as a DAO Discussion for 5 days, and response has been 100% supportive: “[DAO Discussion] - Periodic Treasury Reporting”

Objective:

With the shift in focus from TIME to wMEMO, we have an opportunity to make clear to the market that Wonderland is not a copy/paste OHM fork where the only attraction is the APY.

Wonderland is a hedge/VC fund.

The DAO takes in capital through mints and treasury sales, and deploys that capital for a return. As such, the most important information we can provide to the market it the health and performance of the treasury.

We report a treasury balance on the dashboard. However, since a number of holdings do not have reliable price oracles, it is impossible to reconcile that balance with treasury holdings visible in Zapper or Debank. FUD related to the dashboard treasury balance being “fake” or including large amounts of treasury-held TIME is a daily occurrence on the discord.

A periodic breakdown not only of the composition of the treasury, but of the performance of the assets within it, will send a signal that the protocol is reliable, transparent, and delivering real value. If the treasury is generating strong returns, we should make this information as obvious as possible, eventually expanding the premium over book value.

A 20% annual return on the current treasury would imply a P/E ratio of 6.5 based on the current price of wMEMO. Making such an attractive P/E explicit, combined with a proven ability to raise capital through mints/treasury sales, should result in an increase MC/treasury ratio and benefit current holders.

High Level Overview: On a periodic basis, say monthly, report the total treasury at the start of the period, treasury growth from token sales/mints, treasury growth from investment returns, and total treasury balance at the end of the period. Addtionally, provide a treasury composition that can be reconciled with the number on the dashboard.

Low Level Details:

A report shall be generated once per month and posted to Medium or the Wonderland blog. The report shall include three parts: Treasury Performance, Treasury Composition, and Backing

Treasury Performance:

The treasury performance section of the report shall include the following information:

  • Treasury balance at the end of the prior period
  • (plus) Capital raised from mints and treasury sales
  • (plus) Changes in investment values (unrealized gains)
  • (plus) Returns from deployed assets (realized gains)
  • (less) Team disbursements
  • (less) Other expenses
  • = Current treasury balance

Treasury Composition:

The treasury composition section of the report shall include balances at the end of the period in such a way that the total value of the treasury can be reconciled with the value reported on the dashboard via publicly available information.

Backing:

The stated position of the protocol is that the backing/wMEMO is the price at which the treasury can buy back all circulating TIME/wMEMO. Therefore, the backing section of the report shall include the following information:

Balance available for backing:

  • Treasury balance
  • (less) DAO-held TIME/MEMO/wMEMO (can’t back wMEMO w/ wMEMO)
  • (less) TIME/wMEMO liquidity pools (can’t use an LP to buy into itself)
  • (less) illiquid or otherwise locked assets (these assets can’t be used for buybacks)
  • = Balance available for backing

Supply of wMEMO:

  • Circulating wMEMO at the start of the period
  • wMEMO created (e.g. via mints)
  • wMEMO acquired by the DAO
  • Circulating wMEMO at the end of the period

Backing per wMEMO = Balance available for backing / Circulating supply

Business and/or technical requirements of the implementation of the proposal:
As this is only a requirement for a periodic Medium or blog post, there are no technical requirements. However, the team may wish to automate the generation of the report to make it available in real time.

Conclusion

The true value driver for Wonderland is the size of the Treasury and the ability of treasury management to deploy those assets profitably. Now that the strategy of the DAO is clear, we should provide the necessary transparency for investors to evaluate our performance and invest accordingly.

11 Likes

Shouldn’t be also enforced by this proposal to flag each transaction that goes out of treasury? This is not clear on your argument and it adds transparency.
Also, as I understand, you proposal 2 levels of reporting, one of a broad view and another more detailed, but you leave the broad one open, lets say quarterly and monthly respectively.

1 Like

I find the proposal very useful but what thoughts do you have regarding frontrunning? For example: Sifu wants to accumulate a low marketcap token, the accumulation could take up weeks, how do you deal with the fact, that this particular asset should not appear in the Balance-report before the asset purchase is complete, so that we don’t get frontrun? Suppose, this example can be applied to a large position which Sifu wants to sell as well.

1 Like

Blockchain is public. If the treasury starts buying up a position, it’ll be possible to see it anyway.

1 Like

@Barrel_Aged, correct me if I’m wrong, but the reports would be published after the fact anyway right ?

So Sifu wanting to sell something will only be reported on the report after the transaction has been done. This would eliminate the front running from the equation.

Like @KarePan, we should have an explanation for pretty much everything. The “weird” transaction from sending funds from the treasury to somewhere else and the most important ones to limit FUD and increase transparency. Not just the “obvious” transactions.

5 Likes

Thanks @Barrel_Aged, great proposal, I think this sort of transparency is exactly what we need atthis stage for the DAO, and hopefully this will raise the bar and set the standard fo others to follow.

3 Likes

Agree to proceed this proposal. More transparency should be a better way than unreasonably high APY to attract new comers. We can also know more about what exactly we are holding.

3 Likes

I think monthly may be too cumbersome, especially with such a small team spearheading this project. Quartly or even twice a year would be fine with me. And we could put a floor on what is reportable (for instance, any single transactions over 5 million) or put an amount/time from (any transactions totaling over 15 million within a 1 month period).

I’m all for the transparency, but there is also something important about letting the subject matter experts do the subject matter they’re experts at without loading them down with reports and bureaucracy.

1 Like

Quartly financial reports are the standard for US equities, would also save us costs in comparison to monthly reporting, for sure something that should be taken in to consideration.

But regardless of these little adjustments, I think this is the most important and useful proposal at the moment. Right now, nobody can really calculate or verify the size or backing-price of the treasury for themselves, if it passes, it would bring so much needed clarity and confidence in to this protocol.

2 Likes

I like this proposal. As others have pointed, if this report is not automated, it would be better served to have it quarterly. It is also important that no front-running occurs from it either but I don’t see how that would happen with a simple holdings report.

1 Like

One mod when we discussed this over discord said it should not be cumbersome:

COKillington | 1 wMEMO = 1 mil 01/19/2022

yea i think we can get all that info from the wallet. once we put something together it should be easy to keep up

1 Like

Is the [RFC] already implemented here? Thanks. https://fund.wonderland.money

fund.wonderland.money currently does not subtract out the debt half of leveraged positions. The current balance shown there, with debt and wMEMO subtracted is $513M.

If you further subtract the BSGG position, which is illiquid and can’t be used for buybacks, you get $433M.

1 Like

Now with the upcoming merge, it will probably be a long time till this proposal gets attention again, we ware so close to WIP and hence knowing what the Treasury contains and how it’s calculated…

Hope people don’t get to distracted…

3 Likes

The current WIP Dashboard is kinda helping, maybe they could merke your ideas into the new dashboard

1 Like

This should be done before any merge vote. How can $SPELL or $WMEMO holders make an informed decision without this information?

3 Likes

Hello, I suppose this will be integrated in the main WIP on the future of Wonderland? Definitely would be great to improve information and transparency - seems like meanwhile everyone is aware of this :slight_smile: .
I would consider a periodic “report” an addition to a “dashboard” that visualises up-to-date data. Besides pure data, the report would also include more background information on the investments made and plans/strategy of the manager going forward.

No time to read? Here’s a full-length audio/video reading of this proposal Wonderland Periodic Treasury Reporting Proposal [RFC] Full-Length Reading - Financial Reports Crypto - YouTube Trying to make info on Wonderland more accessible. If you find this helpful, please share and @Barrel_Aged perhaps link at the top.
Thanks for this proposal and discussion!

1 Like