Wonderland, Abra & The Future
Full disclosure: I am a long term investor in Wonderland with at least a 3–5 year timeframe, and I have no intention of selling whether this merger goes through or not.
Preface:
For the last couple of months there’s been a project which I have been following (& investing in) quite heavily, and if you’re reading this article chances are you’re well aware of it already — Wonderland.
As someone who’s been critical of the constraints & shackles of the traditional financial ecosystem and it’s monetary policies, Frog Nation, Wonderland and what they represent is nothing short of a dream looking to come true.
When I first scouted and surveyed the project, I couldn’t help but thinking that the major risks regarding the project was not as much about, say, treasury management or ‘traditional risk’ within finance as it was about something else entirely — regulatory risk and to be frank, making enemies in all the wrong places.
Why do I say this? Well, what Wonderland and Frog Nation are trying to accomplish is nothing short of a revolution. It’s not an armed revolution breaching the doors of [insert govermental building here] but a digital, economic revolution aiming to bring the power back to the people. Away from financial enslavement casued by highly inflational and tightly controlled FIAT-currencies.
For a long time I’ve been a vivid opponent to leverage, not as a general utility, but definitely in the way that it’s been widely adopted by the Frog Nation community. You see, no revolution has ever happened without making some enemies. There will always be powers looking to sustain and keep the status quo.
Protecting yourself and the future of the project and the protocol is priority number one, because you’ll likely meet resistance whether you know it or not.
Therefore, trying to revolutionize something while the majority (or at least a good chunk) of holders are leveraging up (some more responsibly than others, I might add), is not a good idea and as we’ve seen, a recipe for disaster.
While this obviously cannot be proven, I’m of the opinion that several of these ‘whales’ people are referring to in the oh-so active Wonderland Discord is in fact not ‘whales’ at all, but institutional smart money. With the amounts of capital, highly precise execution and of course motive taken into consideration, they sure hit the profile.
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Let’s move on from the revolutionary ramblings of a tired old frog and let’s look to the horizon, and what might be coming next
As leverage from Abra finally has been pulled the plug on, while too late, it’s obviously better than never. The timing is peculiar though as it comes right around the same time as a proposal for Abra to buy out Wonderland, and I briefly want to talk about this.
Abracadabra are offering to buy Wonderland out (with tokens) at a price of 98 billion tokens. As of writing this $SPELL is at a price of $0.007792 which means they would pay in total $761,852,000 for Wonderland.
While the price of $SPELL has gone down slightly since the announcement, it doesn’t take a genius to see that they are not paying very much for it.
If we take a look at the Wonderland treasury. As of this writing, the treasury is a $702,500,448.
14 hours ago however, before I went to bed, the treasury was $850m~. I tried to ask earlier today in the Discord about where that money suddenly went but I never got an answer from either TIME Cops, Cheshire Cats or FUD Fighters. This is merely an observation to point out that the treasury when doing the math for the merger should be higher, not an accusation of any sort or kind.
I’m sure it’s nothing malicious and has a perfectly reasonable explanation, I however was never told.
What is worrysome regarding the Abra merger is when we compare market cap to revenue for both projects. The data I have is flawed at best, but you take what you have, right.
According to Coinmarketcap $SPELL token sits at a fully diluted market cap of $1,531,786,370. When briefly trying to find some revenue-numbers for $SPELL, I found an article from this November stating that they generate $120m in yearly revenue, or, $2.2m a week. While I’m sure that Abra since then have upped their revenue, it would be wrong to use those numbers since they probably to a large extent are made up of Wonderland liquidations — the irony is real.
If we take a look at Wonderland however, currently at the website the market cap stands at $655,722,013. This is less than half of Abras market cap.
I don’t have any official numbers on Wonderlands revenue, but the team has repeated at several occasions that the treasury is generating $1m dollars a day. That is $365 million dollars a year, and to compare that with $SPELL we generate 3x the reveue with less than 50% of the market cap.
What this means, with the surface level napkin math you see above, is that this deal is not very good for Wonderland holders. It’s a great deal if you’re a $SPELL holder.
For those financially illiterate frogs out there, I’ll try to break it down even simpler (no hate, 1 love my frogs): You will be merged with a much larger entity, that produces way less revenue, but you’ll still have to split all the revenue with them, leaving way way less for you.
In an interview Dani once said that he likes things that he can count on, and that $SPELL based on the current revenue is traded at P/E 30.
If the statements are true regarding Wonderlands treasury generating $1m a day, that would mean that Wonderland is trading at an insanely low valuation, we’re talking sub P/E 5.
Coogle, a moderator on the Wonderland discord claimed earlier today that the proposal for a merger has been in the works for months. If this is true, that means $SPELL has been interested in buying out $TIME at way higher valuations than where it currently stands. So my question is, why would we ever be interested to sell the treasury at market price, not counting in revenue generation and selling it at a proper P/E.
For people who claim to care about frogs, this deal is absolutely one-sided and to be frank, shameless in it’s proposition.
If nothing else, what’s stopping you from what we in trad-fi call a hostile takeover? Why not just start buying up Wonderland tokens until $SPELL has a majority ownership?
I might be wrong, and for the sake of a project I truly love I do hope that I am wrong, because deep down i hope WAGMI.
Full disclosure: I am a long term investor in Wonderland with at least a 3–5 year timeframe, and I have no intention of selling whether this merger goes through or not.
