Wonderland TIME Crypto: Everything you need to know
Wonderland crypto is one of the notorious stablecoin projects that suffered in this year's market downturn. The project started as a DAO offering high-yielding and low-risk stablecoins. But later, it became a crypto venture capital fund, supporting new businesses.
However, the project started to tumble in late 2021. Other than the crypto winter, it also faced a series of issues. Among them were strategy loopholes, their developer's criminal past, and overleveraging that led to a crash. However, its creators have decided to relaunch the project.
Here's everything you need to know about the Wonderland crypto crash to help you decide if it will recover or not.
How does Wonderland crypto work?
Wonderland is a decentralised autonomous organisation (DAO) that introduces a unique stablecoin. Its governance is through the use of the TIME token. The token has stability in its value as numerous other tokens back it. These include; Magic Internet Money (MIM), TIME-AVAX LP, Wonderful Memories (wMEMO), and wAVAX.
Wonderland is an Olympus DAO fork built on the Avalanche Network. Its ecosystem works on the Proof-of-reserve (PoR) mechanism.
PoR requires bond reserves for validation. If you own different tokens through which you can mint TIME, you can become a validator. Though the DAO is built on the Avalanche Network, it has cross-chain property. That's why it is compatible with various other tokens. TIME is distinct from most stablecoins pegged with fiat currencies. It gets its consistency and stability through the basket of assets.
Wonderland crypto price
The claims of stability and consistency have fallen short for the project. The ecosystem's major coin, TIME, is in shambles. Also, the TIME-AVAX LP and wAVAX coins have been discontinued and cannot be used for minting TIME.
Currently, TIME's price is just over $11. This year, the token's price has declined by more than 95%. In November 2021, its price stood at over $9000. Since then, it has continued on a downward trend. Also, there is no sign of stability in its price.
On the other hand, wMEMO's current value is still around $24,000. Nonetheless, its price is also quite unstable and is not gaining traction in the market.
How did Wonderland crypto crash?
Several factors are at play regarding the downfall of Wonderland crypto.
Here are a few of them:
1. The buyback strategy
wMEMO is a wrapped stablecoin which has a set value. As its price started to fall below this value, the firm opted for the buyback strategy. To increase the cost of wMEMO, the firm used its treasury fund to buy the coins from the market. Temporarily, there was an improvement in its value. However, it did not work well in the longer run. The bearish market continuously affected the coin's price.
2. Overleveraging & Investors liquidating their assets
Secondly, as the buyback strategy was public, many investors joined the campaign to make profits. They took loans to purchase more wMEMOs and pledged their existing coins as security. So, when the value of wMEMO continued to decrease, investors liquidated their funds to pay off debts. With more liquidation, the price dropped further. This jeopardised the firm's financial state as the overall debt constantly increased. The debts also caused a delay in the airdrops. Airdrops are a percentage of coins acquired as a venture capital fund. Three airdrops needed to be distributed among investors between December and January. However, all of them got delayed, causing more suspicion among investors.
3. CFO Sifu's controversial background
One of the significant blows for Wonderland crypto was the controversial background of its CFO. Investors started to lose confidence as its pseudo-anonymous CFO, Sifu, turned out to be Michael Patryn. He is a convicted felon for the $100 million scam through a Canadian exchange. Patryn disappeared with the money in 2019 and launched Wonderland in 2021.
Patryn also worked with the lending firm, Abracadabra and MIM for this project. Meanwhile, Abracadabra Money founder, Daniele Sestagalli, declared that he knew about Patryn. He maintained that an individual's past actions don't determine their future. This received significant criticism from the industry, and his venture, Popsicle Finance, also suffered.
4. Sifu's exit with an alleged rug pull
An alleged rug pull was another reason behind the project's downfall. It was not only investors who took leveraged positions because of buyback. But the CFO himself withdrew millions from the treasury before exiting. Though the firm tried to cover it up as compensation for his services, it raised many questions about a rug pull attempt.
Wonderland crypto was once a promising project introducing a distinctive stablecoin backed by a treasury. But, so far, its algorithm has failed to perform. Both its tokens, TIME and wMEMO, have been experiencing a downward trend since November 2021. Moreover, its ties with an alleged fraudster affected the investors' trust in the project. Though the developers have announced a relaunch, it might be challenging to regain investors' confidence and trust.
Author: Wasay Ali
Wasay Ali is a versatile professional writer with global experience and a background in mechanical engineering and social science. He is adept at crafting news and informational content for the crypto space and has experience writing for other niches. He is a professional SEO content writer who has worked with several digital marketing agencies and clients in the US, UK, Pakistan, and Europe. He is a dedicated volunteer and enjoys reading, writing, poetry, and going to the gym. He is an INFJ-A personality type dedicated to positively impacting the world. Wasay has a passion for writing as it allows him to express his creativity, share his knowledge, and connect with people worldwide.