[WIP #7] - TheSkyhopper+Bastion Treasury Management

A personal note to Frog Nation

This is a proposal to become the next Treasury Manager (“TM”) of Wonderland for three months. A vote will be held to extend this contract before it expires. I’d like to get the Wonderland treasury moving forward during my term even if it proves to be short. I would be honored if I can continue onward and make this the premier reserve backed DAO around. Admittedly, there are some big shoes to fill in the TM role.

Here is the RFC and General Discussion for an introduction to my team and what I bring to the table:
DAO Discussion - Bastion Trading/TheSkyHopper to manage or advise on Wonderland Treasury

RFC - Bastion Detailed Proposal for Treasury Management

Overview:

January began with a treasury value of 900mm. A bulk of this value was wiped away and the previous TM was voted out by the end of January. Around 250mm of liquid assets have been mostly idle following the vote to “rage quit.” This proposal seeks to install me and my team to put these assets to work and get back to treasury growth.

Proposal and Terms:
This proposal puts to a vote to have me (@SkyH) manage the treasury with the full force of Bastion Trading assisting. Included is strategy and advisement with Daniele, professional risk management, and increased security via multi-sig access. The initial contract will be three months to provide adequate time to asses performance. Two months into the term a renewal vote will be taken to ensure time to transition to a new TM if required.

Objectives as Treasury Manager:
I am excited by the opportunity to work alongside Daniele and deploy the treasury into sustainable growth. I think it is important to start treasury management on a strong footing as we look to start a fresh chapter of Wonderland. This includes weaponizing all our assets - our massive Frog Nation community, relationships, and financial strength, to create value accretion for wMEMO holders.

Background and High Level Details:

I have a career spanning 20 years in portfolio management and trading five of which are in cryptocurrency. My team at Bastion Trading and I will directly manage the treasury for a minimum of three months. This entails discussion with Daniele on overall protocol vision, deployment of capital into growth strategies and directional trading strategies, and utilizing other managers and personnel to this end. I plan to streamline the governance framework for sustainable treasury management into the future and work constructively with eligible proposals when applicable.

Low Level Details:

Moving forward requires focus on stabilization at backing initially. I will take these steps to get Wonderland back on track:

  • Restart Buybacks: wMEMO has been trading below both non-liquid asset backing (currently around $54,000) and liquid backing (around $40,000). This presents a tremendous opportunity for buybacks. Note that a token with an intrinsic value of $40,000 purchased for $25,000 results in a $15,000 savings which in turn increases backing on remaining tokens. Trading too far below backing may also allow for hostile vampire attacks and takeover attempts. We will develop parameters to allow some treasury allocation for buyback support. This includes built in front running protection.
  • Optimizing yield farming strategies: There are 122mm of stables, 30mm in ETH, and more not being utilized in farms. We will look to deploy them and find strategies to get MIM working in yield farms without selling them as the price is currently about 1 to 1.3% below peg. For tokens that have staking rewards, we can place them into staking nodes or delegate them.
  • Re-establishment of directional exposure: Assets should be deployed into a collection of premier L1, L2 chains, gamefi and metaverse themed tokens – while searching for innovative DeFi 2.0 themed tokens. This includes long and short horizon trades with variable level of exposure depending on risk assessment.
  • Treasury Related User Interface (“UI”) and Experience ("UX”) improvements: While this is not directly in my purview, I would like to see continuation on app improvements. The Treasury breakdown in liquid assets versus non-liquid assets such as BSGG and SAFT exposure (Cross of Ages). This should include descriptions of these products to help potential investors and our community evaluate Wonderland’s ventures. A running tally of outstanding wMEMO should also be easily visible without the need for users to check each treasury wallet.
  • Increased security: The treasury multi-sig should be expanded 4/6 with me added. The previous treasury manager had full access to all funds. This level of trust is not required if funds are managed with the core team as signers.

I estimate integrating the team at Bastion Trading and acting on these points will constitute the first two months of treasury management.

Expansion Plans – Longer Term:
We want to expand our reserves to increase backing as well as expand our influence to open up new lucrative opportunities.

  • VC type investments: SAFT agreements (seed pre-ICO token deals) have worked well for both Wonderland and our partners (BSGG, Cross of Ages) via value accretion of the treasury and leveraging our more than 220,000 holders, respectively. I believe it makes sense to explore adding a dedicated New Project Analyst team to help screen, structure, and execute VC deals. This will give valuable headroom back to Daniele and the team to keep building.

  • Manager Selection and Allocation Management: It will also make sense to add managers who have skills in different strategies. I can think of trend following strategies to be potentially a great add for example. I would like to work on sustainable parameters and allocation rules for the DAO to allow for third party management as well.

  • Expanding and diversifying our DAO’s reach: It is advantageous to have our relationship with Abra and Popsicle, but there is no downside to expanding to other protocols that we can partner. Here, for example funding in/outflows may be able to be enhanced with borrowing or lending opportunities with protocols such as Truefi, Maple, and others.

  • Liquidity as a service: with the equity base, and strong DeFi capabilities along with a large community base, Wonderland can provide an integrated service for other protocols for liquidity where Popsicle may not have reach. A service on the institutional side is competitive with firms such as GSR, Jump, Amber, Wintermute and more. Our unique position allows us to play a little differently, or even in combination with them.

  • Governance Around Treasury Management: DAOs in general are a new type of institution that needs to continually evolve. It embodies the spirit of democracy, but in practice this has been far from perfect in crypto as in the real world. Treasury management is the core function that needs to succeed within the DAO in the long run. A sustainable governance model must always be sought. I would like to have to look at overhauling voting timing, tightening and solidifying the proposal to WIP processes, and to create an active governance function (such as a board) over the Treasury Manager and the decision-making process.

Wonderland 2.0 has some good proposals and I would like to help further formulate and enact those ideas if they pass governance. I will do this for a strong sustainable future regardless of whether it means relinquishing my role at the end of my proposed term.

Fees

Following feedback, I propose a 5% fee on profits earned by the treasury per month, subject to a high water mark.

I propose a 5% fee on profits earned by the treasury per month, subject to a high water mark. A high water mark means we won’t make fees on making back losses. In the event of a loss one month, the next month will need to make that loss back first before any commissions are earned. This both provides a high incentive for my team and I and a lucrative deal for Wonderland. If the treasury makes a great deal of capital so do we. This fee covers my services as well as the team at Bastion Trading and any advisors.

This is a competitive rate for similar positions in traditional finance that expect returns around 15% annually to investors. I know the DAO is expecting significantly higher returns and I aim to deliver the best returns possible.

The fee can be renegotiated upon a renewal vote.

Business and/or technical requirements of the implementation of the proposal:

To fulfill this role, I need full support from Daniele and the Wonderland leadership team as well as this is essential to move things forward.

With leadership, I also need to establish an agreement on the process of how to:

  1. access the treasury wallet
  2. know the extent to which I can represent Wonderland to external counterparties
  3. appropriate role in Discord to communicate with the community
  4. be involved with the developers in UI improvement suggestions

Voting Request
The Snapshot Vote Duration should be 7 days. Provided the Snapshot passes, I will begin to work with Daniele and his team on transitioning into the TM role. We will sort out logistics of this transition. I envision that a strategy following the above guidelines will be announced.

(edit) Link to snapshot:
https://snapshot.org/#/bestfork.eth/proposal/0x15f04063c8566832500408b4d6e757f557b2a11f207169c96424a2234c10006d

Conclusion:
This should provide insight into my thinking and desired outcomes as Treasury Manager. One of my goals is to be as transparent as possible. I can answer any further questions you may have on the Wonderland Discord @SkyH.

Long Live The Frog Nation! LFG!

77 Likes

10% is too much, 5%!

33 Likes

Will we know who SkyH is? or is it wrapped up in the bastion trading org and thats the only identity we know of?

10 Likes

In his initial proposal (linked above) he doxxed himself and shares his LinkedIn profile :blush:

25 Likes

10% commission is too much. I believe the original proposal was 5%?

21 Likes

I’m for it. 3 month trial. 10 percent incentive to make us money. I like it.

11 Likes

10% is to much, please remember that you are giving access to millions of usd worth, i think 5 percent is gokd enough

18 Likes

10% of profits seems reasonable on a trial basis. I’m ready for our money to get back to work for us.

7 Likes

Standard fund/VC/PE managers have the high water mark, they ALSO have a benchmark return that they have to exceed before they earn fees. Typically the benchmark return is what could “easily” be earned without an experienced manager - market standard is 7-8%. So any fee is only earned by the manager once the fund has earned 7-8%. I think such a benchmark requirement would be reasonable in this situation or else the manager is getting fees for no material value add to WL

37 Likes

I’m principle this looks ok BUT 10% performance fee on money they didn’t raise is an absurd. Specially with 300 mio that is a substantial amount. More importantly, MONTHLY high water mark is ludicrous. No money manager in the world takes money every month. If they amend the proposal to 3% performance fee and semi-annually payment/high water mark they will have my vote and be much more in line with common sense. I also think calling monthly payments “the market” is extremely misleading and borderline disingenuous.

27 Likes

3 month trial period is fair, then if we are about to move on with the same team I suggest to another 6 moths extension before the final decision.

10% commission seems high 5% - 7% seems reasonable

11 Likes

5% is fair. 10% is too much.

12 Likes

i support the proposal. 10% of PROFITS fee is fair, lets move WL forward finally and not delay

5 Likes

In rl a VC historically charged 2% and 20%. In recent years that has dropped to 1.5% and 15%. 10% with the performance earn back is a bargain. Sky only earns if he helps us earn. If he doesn’t earn, we pay nothing. That’s a great incentive and a great deal. Lets not drag this out and be petty. Lets make some $

18 Likes

There should be a minimum performance KPI and get paid if performance its on top of that. This so we can make sure enough effort its put into making it growth. Many people had mentioned 5%, the team its asking for 10%, lets go the middle point to 7.5% for the trial but if a minimum performance is achieved not just not lossing

3 Likes

Your Terms are way to easy and lenient towards You / Bastion and sell us frogs in WL short month in month out. This is Defi / Crypto, gains can’t be compared to traditional markets and you can’t have a free lunch either. I propose that you must first exceed 10% Profit for the month before being entitled to 5% for anything over the 10% profit in a month and your fees paid Quarterly not monthly to ensure that you are hungry for longer. This would obviously be in conjunction with a high water mark.

Even without being a “Pro Fund Manager” with "“Decades” of experience and a “team” to support; it is easy to argue that most traders who been around for long enough in crypto can easily make 10% a month (and I’m not even talking about what can be made in a Bull Market), you should not be entitled to easy money and guaranteed money at our expense but rather rewarded for what can’t ordinarily be achieved.

Finally, there should also be an agreed & transparent system in place to make sure there is no advantage given to Bastion or it’s mates / Clients to gain unfair advantage over us ordinary WL frogs with inside info or worse still conflict of interest with deals put together by you or your team.

20 Likes

Sounds good. For those that say that 10% is too high, I propose we do 5% for the 3 months and if the metrics are met then vote to continue with 5%, if its above goals we continue at 10%, otherwise “off with their head”(vote to terminate) - sticking with wonderland theme. Lets utilize governance to its fullest by voting based on merit.

If @skyH doesnt like that there is a possibility at the end of the 3 months that they will only get 5% then they can leave earlier or just not take the job

I will add, that people that manage important things should be fairly compensated or they will be tempted to not give their full effort or worse. choose carefully friends

7 Likes

Finally can’t wait for you to come on board Skyhopper, completely support this

1 Like

There’s truth in this but in spite of the WAGMI notion it seems to me nothing is easy in crypto. Most funds, including this one have been a crap shoot and performed pretty poorly. Your statement implies 7% is “easy”, we haven’t witnessed that. Most of us have witnessed -90% all in.

1 Like

Overall, I would support @skyhoppers` proposal, however, the 10% seems high, hopefully the 3 month trial period would also allow us to look at this figure depending on the performance to that point.