Wonderland Money is the first “decentralized reserve currency protocol” to be built on the Avalanche blockchain. The native TIME token is backed by a basket of cryptocurrency assets that create a price floor that the TIME token cannot fall below. The DeFi Wonderland crypto ecosystem enables users to stake the Wonderland TIME token to earn compounding staking rewards. Also, the platform offers a minting feature that effectively allows users to purchase bonds from the protocol.
In this article, we’re going to dive deep into the DeFi Wonderland crypto ecosystem. We’ll discuss the TIME token, the Magic Internet Money token (MIM), and the mechanics of the Wonderland Money protocol. Plus, we’ll take a look at rebase tokens, TIME token staking, TIME minting, and the inner mechanics of the Wonderland Money protocol!
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What is Wonderland Money?
Wonderland Money is “the first decentralized reserve currency protocol” to launch on the Avalanche blockchain. The native Wonderland TIME token is a rebase token. It is backed by a basket of assets under the custody of the Wonderland treasury. This mechanism provides the TIME token with a base value that it cannot fall beneath. Also, the Wonderland crypto ecosystem uses game-theoretic mechanics and economic incentives in the form of TIME token staking and asset minting.
Wonderland Money aims to establish a stable currency system on the Avalanche network under the control of protocol policy. Also, the goal for the TIME token is to become a worldwide unit-of-account and medium-of-exchange that promotes wealth creation. Furthermore, the project aims to establish a price equilibrium using a basket of assets that don’t rely on fiat currencies.
The platform features two core services, staking and minting. Staking entails locking up the TIME token to earn compounding TIME token staking rewards. Plus, stakers receive the majority of newly minted tokens. Minting requires users to lock up liquidity pool (LP) tokens or Magic Internet Money tokens (MIM) for a specific time. In exchange, they receive a discount on TIME tokens.
Wonderland Money is a fork of the Olympus protocol. Also, the development team is largely anonymous. However, the team commits to achieving full decentralization and is actively working towards a community governance model using a decentralized autonomous organization (DAO). Moreover, the protocol operates a dual value-accrual model that sees high staking rewards control the supply and expansion of the TIME token supply. At the same time, the token minting function enables the protocol to generate liquidity to ensure network stability.
The Wonderland TIME Token
The native Wonderland TIME token is a rebase taken at the heart of the DeFi Wonderland ecosystem. Also, the TIME token is backed by a basket of crypto assets, which works in a similar manner to the gold standard. Whereas most stablecoins are pegged to the price of a fiat currency like the US Dollar, the TIME token is backed by one Magic Internet Money token (MIM), which is algorithmically price-pegged to the US dollar and backed by various interest-bearing tokens (ibTKNs).
The TIME token has a price floor of one MIM. Resultantly, if the price of one TIME token falls below the price of one MIM, the Wonderland Money protocol would “buy back and burn” TIME tokens until the price was at one MIM. However, the protocol does not impose an upper price limit on the TIME token. Moreover, users can consider the price of the TIME token to be equal to one MIM, plus a premium (if the price is above one MIM). This means that the market is the main driver in establishing the price of the TIME token.
Because the Wonderland TIME token is a rebase token, the price is generally more volatile than traditional cryptocurrencies like BTC or ETH. When somebody buys a TIME token, they receive a share of the market cap. The supply of tokens expands and contracts according to protocol usage and the number of minters and stakers interacting with the platform. At the time of writing, the TIME token is trading at around $7,837, with a market cap of $1.57 billion, according to CoinGecko. Also, the TIME token is the first Avalanche-native token to reach the top-100 cryptocurrencies by market cap.
Magic Internet Money (MIM)
Magic Internet Money (MIM) is an ERC-20 stablecoin that forms part of the Abracadabra Money ecosystem. Users known as “Spellcasters” can lock up interest-bearing tokens (ibTKNs) as collateral and take out US Dollar-pegged stablecoin loans in the form of MIM tokens. Along with liquidity pool (LP) tokens, MIM tokens can be traded in the DeFi Wonderland crypto ecosystem to mint TIME tokens at a discount.
Also, the MIM stablecoin operates on multiple decentralized exchanges (DEXs) across different blockchain networks. This includes Uniswap, Curve Finance, and SushiSwap on Ethereum. Plus, the MIM token is available on the Moonriver DEX, Solarbeam, and the Avalanche-native Trader Joe and Pangolin exchanges. In the future, the Abracadabra Money team aims for the MIM token to be interoperable with more smart contract-enabled blockchains.
Rebase Tokens
Rebase tokens have an elastic circulating supply. Holders of rebase tokens will often see changes to the number of tokens they hold in their wallets. This is because rebase tokens often have a “target price”. The elastic supply enables the minting of new assets. In the event of a rebase, newly minted assets will undergo regular burning. When this happens, the supply of the rebase token may contract. However, the market cap of the token might increase.
The supply of a rebase token algorithmically increases or decreases according to the price of the token until it reaches the target price. Accordingly, rebase token holders can consider their balances to represent a share of the market cap of a particular asset. Instead of focusing solely on the price of the token, holders must observe the market cap of the asset as the best indication of its value.
Despite the apparent volatility in the price of rebase tokens, their market caps generally remain fairly constant. An example of this would be if you were to go to sleep with 1 ETH in your wallet worth $4,000 and woke up with 2 ETH in your wallet, each worth $2,000. Moreover, rebase protocols like Wonderland Money and Ampleforth aim to reduce volatility over time as more assets are minted to meet demand.
Also, rebase tokens add a new dimension to decentralized finance (DeFi) and yield farming. If you want to learn how to interact with some of the most popular DeFi protocols in the industry, check out the DeFi 101 course at Moralis Academy! Here, we teach students how to install and navigate the number-one Web3 wallet, MetaMask. Plus, we teach students how to use MetaMask with top DeFi protocols, including Uniswap, Compound, Aave, and MakerDAO!
TIME Staking
Staking is the number-one strategy for generating value in the DeFi Wonderland crypto ecosystem. By locking up TIME tokens, stakers can earn rebase rewards that come from the sale of bonds. The distribution of rebase rewards varies depending on the parameters of the current monetary policy in place and how many TIME tokens are staked in the Wonderland Money protocol.
By participating in staking, Wonderland TIME token holders can earn a passive income with DeFi. Furthermore, stakers receive “MEMOries” in exchange for staked TIME tokens at a 1:1 ratio. The balance of MEMOries rebases automatically. Plus, MEMOries are compatible with other DeFi protocols.
Minting
The second tool for generating value in the DeFi Wonderland crypto ecosystem is token minting. Users effectively mint Wonderland TIME tokens by selling assets to the protocol and buying bonds. This function operates like a “cross between a fixed income product, a futures contract, and an option”. Furthermore, the protocol generates a quote for each minter, which defines the terms of a trade in the future. Within these terms is a specified lock-up period. After this period, 40% of all rewards are redeemable.
The process of minting is a short-term value creation strategy. The secondary bond market makes it possible to make a profit from bonds. However, this requires closer attention than staking and is, therefore, an active investment rather than a form of passive income. Another benefit of minting is that it enables the DeFi Wonderland protocol to generate its own liquidity and “become its own market”. This works like a bond mechanism and aims to reassure TIME token holders that their holdings will increase in value over time.
Market Dynamics
Staking in the DeFi Wonderland crypto ecosystem tends to offer long-term growth prospects and the chance to earn a passive income. However, minting is an active investment strategy. It enables participants to earn a profit on short-term price fluctuations. Also, because the TIME token is pegged to a basket of assets, participants have a level of reassurance that price fluctuations will return to their intrinsic state.
An increase in staking and minting can trigger an increase in the supply of Wonderland TIME tokens. When this happens, an increase in TIME token purchases from the market often precedes. In turn, this increases the price of the TIME token, allowing the protocol to sell TIME tokens at a higher rate. Accordingly, stakers receive a higher yield, and bonders receive a more significant discount. Also, this series of events increases the capacity for the creation of new bonds. However, the same is true in reverse. Moreover, declining demand can reduce staking rewards and the capacity for the protocol to mint new assets.
Why Do We Need the DeFi Wonderland Crypto Ecosystem?
Stablecoins have become a staple of decentralized finance (DeFi) thanks to the price stability they offer over non-price-pegged cryptocurrencies. However, stablecoins fail to hold their purchasing power over long periods due to the depreciation. Wonderland Money addresses this issue using a non-pegged stablecoin. Moreover, the Wonderland TIME token can retain its purchasing power despite fluctuations in the crypto market and the depreciation of fiat currencies.
Exploring Wonderland Money and the TIME Token Summary
Wonderland Money provides a straightforward way for users to earn a passive income through staking. Also, as the TIME token is backed by a basket of crypto assets, holders benefit from a base value that the asset must stay above.
Furthermore, the platform uses a novel rebase function that enables users to mint TIME tokens in the form of bonds. Not only do these game-theoretic mechanics incentivize participation in the DeFi Wonderland crypto ecosystem, but they also provide a decentralized reserve currency that retains price stability throughout periods of market volatility.
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