Letter to Holders (2022)
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Dear Wolf Pack,
As we closed 2022, it’s been an eventful ten months for both Wolf Works DAO (WWD) and the crypto market. The reason behind creating a DAO with treasuries and governance on an immutable blockchain was to create a transparent, secure, and sustainable organization that holds real assets. WWD was founded with the goal of creating and implementing long-term strategies that would enable a solid and lasting foundation on which to grow. Through careful planning and execution, we’ve built that foundation which we will continue to develop and expand.
Summary of 2022
It has been an incredible journey since the start of our project, and we have accomplished so much in a short amount of time. We have created a pool for $WLD on QuickSwap (DEX), expanded our community to nearly 2,000 members through organic growth, launched NFT collections, fostered key partnerships, introduced Wolf Works Labs, voted on acquiring 20% direct ownership of the large arbitration case, voted on the size of what should be set aside for a payout to our holders (80%), and more. We have made some improvements in documentation and have continued to improve our presence. We have developed a certification process for projects we will sponsor or take part in, as well as bonded comprehensive insurance that covers all our services.
Crypto in General
2022 was an interesting year for the crypto and blockchain world. Fraud, deception, exploits, regulatory uncertainty, and carelessness ran rampant. This, combined with the average investor’s willingness to invest billions into both centralized and decentralized entities with little to no due diligence, has led to significant losses throughout the year.
Some of the significant centralized disasters this year include the failures of Terra Luna, overleveraged CeFi intuitions like Three Arrows Capital, Celsius Network, and Voyager Digital not being able to return funds to its customers. Topping it all off in the last quarter of 2022 with the fall of FTX. Within a month before FTX’s collapse, we were at Converge22 in San Francisco where Kevin O’Leary said, “If there is ever a place I can be and I am not going to get in trouble, it is going to be at FTX.” Each of these instances has played a role in creating a broad distrust in the viability of a crypto market.
Significant losses and distrust aside, it was another year of learning and experimentation for investors, organizations, and regulators. The crypto and blockchain industry is a very undefined area, and many things are new in nature or have never been done before, such as the Ethereum Merge. Throughout the year, there were some successes and many failures. However, every failure was ultimately accompanied by a new lesson and discovery. Each of these will play a critical role in how the blockchain and crypto industry is shaped by the investors, creators, and regulators moving forward.
The Treasury
A treasury (aka portfolio) is a type of “financial account” that holds a variety of assets, including currencies and investments on and off the blockchain. It is an essential part of any decentralized organization that relies on the input and approval of its members to operate. In order for these funds to be transferred in and out of the treasury, proposals must be passed by the members of the DAO using voting rights granted by their $WLD tokens. This not only ensures that funds are allocated efficiently and effectively but also helps to build trust and engagement between DAO members as they work together to achieve shared objectives.
Throughout the year, the treasury has had some additions and evolved significantly. We have certified, insured, and assisted a project with its launch which resulted in 3M $COAX tokens being added to the treasury. The largest change in the treasury was a proposal passed in October to exchange $LITI for 19% direct ownership of the case. This change means that WWD’s holdings of the case itself have increased from 1% to a total of 20% direct ownership of the case and WWD no longer holds any of Liti Capital’s tokens.
This arbitration case is the largest asset held in WWD’s treasury, and over the last ten months, it has progressed significantly with promising updates that have been given. In May, we were informed by the plaintiff(s) that all aspects and points in the claim were recognized as valid and won. From that point, the case moved into the merit phase, where the focus shifted towards figuring out a final unappealable award. The final hearing on the case occurred in November, and the arbitrators are currently determining the award which is expected in the near future. After the award is granted, the asset recovery process begins. We remain hopeful that the outcome will result in significant gains for WWD and its holders.
Products
We’ve put a lot of time and capital into building infrastructure and products that may not be quantifiable assets that are sitting in the treasury, but these pieces of infrastructure and products have a lot of qualitative value and potential for generating significant revenue. Throughout the year, we built offerings for operational due diligence, auditing, scam prevention, insurance services, and more for organizations. At the beginning of August, we officially became a reinsurer under Relm Insurance and had our first organization use our products which resulted in the generation of another asset for the treasury.
Over time these products have the potential to scale substantially, especially with recurring fees from our services, such as our insurance offering. WWD benefits more than just monetarily from these products. By using these products ourselves within our Wolf Works ecosystem, we minimize our chance of being vulnerable to exploits and therefore protecting all of our holders.
It’s almost daily that someone messages one of us or we see on Twitter that another project crashed and burned. Typically, tens or hundreds of millions just within a very short period. So how do we stand out, create a safe environment for every stakeholder, create something attractive to larger players, build something rock solid (not a house of cards), and ultimately something sustainable for the long-term? Why should someone who has a lot to contribute choose to be a part of Wolf Works out of every other opportunity that has been presented to them? Why should they take us seriously?
We become proactive, not reactive. We build strategic partnerships (like ones with due diligence companies) and gather reliable resources to use. We stay compliant. We audit. We test. We investigate. We conduct bug bounties. We get third-party validations. We do everything that we can to stay out of harm’s way. If it puts anything at risk, then it isn’t worth doing so don’t even attempt to do it. We ultimately build a pipeline and infrastructure so that anything that we or our clients lay their hands on can be properly evaluated before anything ever gets deployed.
Wolf Works Labs
At the end of October, we announced Wolf Works Labs, a new company specializing in Web3 and technology development. With an experienced team of crypto-natives, developers, architects, analysts, and designers at the helm, Wolf Works Labs will become a major contributor to the development and growth of the WWD ecosystem. Currently, 523,813,105 $WLD tokens are reserved for Wolf Works Labs. This means that Wolf Works Labs will directly benefit from the growth of WWD and is incentivized to do what is in the ecosystem’s best interest. To safeguard the interests of the WWD community and maintain public trust, the company has decided to pledge to either abstain or not participate in proposal voting with any tokens owned by Wolf Works Lab for this year.
If you missed the announcement and you‘d like to read more about Wolf Works Labs, then you can read the article about it here https://medium.com/@wolfworksdao/introducing-wolf-works-labs-83268d6b1a86
Passed Proposals
Throughout the year, there was a total of 10 proposals created. Six of these proposals were passed by $WLD holders.
#6 — Big case payout
Description: 80% of the funds received from the case will go to holders, and the other 20% will remain in the treasury.
Date Passed: 11/14/22
https://snapshot.org/#/wlitidao.eth/proposal/0x10afc607a1e25db1b966a83e9100600827a8296fe25e776f717acc6589a3cb10
#5 — Setting the Snapshot Quorum
Description: Sets the quorum (or minimum voting participation required) for a proposal to be passed to 671M tokens.
Date Passed: 10/28/22
https://snapshot.org/#/wlitidao.eth/proposal/0x3410edcb81d2c67b9977f690c48f57827eb01c5a5fc0599ea3d8ac7f6f71b752
#4 — LC Token Buyout
Description: Exchange the $LITI tokens held in the treasury for 19% direct ownership of the largest case in Liti Capital’s portfolio.
Date Passed: 10/24/22
https://snapshot.org/#/wlitidao.eth/proposal/0xdac4047de0286f738ce86f76844aed53c8b6b4e262f73c5bb813cbff8bb5674a
#3 — Unwrap $wLITI to $LITI
Description: Convert $wLITI in the treasury to $LITI.
Date Passed: 7/25/22
https://snapshot.org/#/wlitidao.eth/proposal/0x55d240473d7d9269dfa4df479e2696679ec5cc2f3b298c43c708988fdd8ff50e
#2 — Renaming the DAO
Description: Rename the DAO from “wLiti DAO” to “Wolf Works DAO.”
Date Passed: 6/10/22
https://snapshot.org/#/wlitidao.eth/proposal/0xc32c87a4d1c8b7d91566db9b4a0e44102c8ad5c9b82e4e034ff638ae5b0b777b
#1 — Allocating Revenue for Buybacks
Description: Allocate half of the revenue from NFT secondary sales towards buybacks.
Date Passed: 4/10/22
https://snapshot.org/#/wlitidao.eth/proposal/0x03d4d2ed94c11ea5f307b6065d8640c550392033496e8ffd03fe98eb3afe72d2
Things to Expect in 2023
Looking forward, here are some things to expect and have in mind throughout the new year.
In order to stay ahead of the enormous wave of regulatory changes that are anticipated in the near future, we have decided to take preemptive actions such as compartmentalizing development and ecosystem expansion into “PODs” and “external organizations” like Wolf Works Labs for the purpose of compliance.
The main driver for Wolf Works Lab is to develop products for the WWD ecosystem (services in certification, investigation, analytics, crypto-insurance, and more). The consumers that take part in either WWD or one of the projects we promote must be protected from foul play and scams and as such will encourage an expansion of our community member base and active participation in governance. With the latter, the goal is to keep working on solutions to further decentralize governance so WWD community can impact the common future and operate efficiently.
In Vitalik Buterin’s blog post “DAOs are not corporations: where decentralization in autonomous organizations matters”, he created a diagram showing the relationship between a DAO’s “core governance” and how work and management get distributed to “Pods” or “external organizations.” This model will serve as a guide for how parts of WWD and its products will be governed in the future.
We will continue to improve our documentation on WWD and its products as they are scaled. We will also use dune.com to create a live dashboard view of key on-chain analytics. On the dashboard, we will include things such as historical holder count and a live view of treasury addresses, plus the contents.
As previously mentioned, the arbitration case’s final hearing has taken place, and a final decision from the arbitrators is expected in the near future. This is something that all of us have been looking forward to since it can result in significant gains for WWD and would mean that there is more capital in the treasury to allocate.
As we get closer to having more capital in the treasury, it will be necessary for all of us to start thinking about ways that we can allocate it. A portion of the capital should go towards reinvesting and diversifying the treasury, while the rest goes towards reserves, liquidity pools, etc. Since trading $WLD takes place on decentralized exchanges, investing more capital into our liquidity pool(s) will reduce price volatility. This will allow bigger purchases and sales to take place with a lower price impact. It may be beneficial to go cross-chain and create liquidity pools on other chains as well.
Final Thoughts
Although many of us have experienced a rough year as investors in the crypto market, it is our chance to learn and come out stronger than before. We have an opportunity to build for the world based on shared values and distributed governance. As strong believers in decentralization, blockchain technology, and distributed governance, we look forward to seeing what’s in store for WWD and the crypto market in the new year!
Sincerely,
The Wolf Works Team
