Avalanche-Based Wonderland Makes Seed Investment in Betting Dapp

The DAO wants to compete with venture capitalists by providing opportunities to its “frog nation” instead.

Jan 7, 2022 at 9:53 a.m. UTC
Updated Jan 7, 2022 at 4:58 p.m. UTC

Algorithmic money market Wonderland has made a seed investment in Polygon blockchain-based decentralized betting application BetSwap, the team said in a post on Friday.

The move marked one of the first instances of a community-governed crypto project investing in a decentralized finance (DeFi) protocol that relies on smart contracts instead of third parties for providing financial services, such as lending, borrowing and trading, to users.

Wonderland users (self-styled as the “frog nation” in crypto circles) who stake assets on the Wonderland platform will receive BetSwap tokens once they are issued. BetSwap allows users to bet on or be a bookmaker for a variety of markets, such as sports. Its BSGG tokens allow holders to get discounted platform fees and participant in platform governance.

According to the post, about 2 billion BSGG tokens were allocated for $18.3 million worth of wMEMO, a freely traded token that represents the amount of TIME – the native token of Wonderland – staked by users.

What Wonderland brings to the table is both funds and a dedicated community that interact with crypto protocols. “Wonderland is offering a unique perspective for early projects: the eyes and opinions of a vibrant, fast-growing crypto community which is aligned to its treasury and the success of these early-stage investments by holding the wMEMO token,” developers said in the post.

Decentralized autonomous organizations (DAOs) like Wonderland let their token holders propose improvements and govern decisions pertaining to the growth of such platforms. They differ from traditional companies, where decisions may be driven by a board of directors and private investors instead of users.

New use cases of DAOs are extending from mere governance to investments in other protocols, where participants receive token allocations based on the amounts invested or staked in DAOs.

Wonderland and the Frog Nation

Wonderland’s TIME tokens are backed with a basket of underlying assets issued over the Avalanche blockchain, giving the tokens an intrinsic value that they cannot fall below. TIME is what the platform calls “money” – a wholly decentralized means of value backed by liquidity provided by the platform’s own users.

Among Wonderland’s objectives is to invest in other DeFi protocols using funds staked by its users, in exchange for tokens.

This is part of a rising anti-venture capitalist narrative by the frog nation’s “frogs” – a bunch of common men and women using technology and crypto to capitalize on opportunities and provide value to protocols, instead of seed funding rounds and investments mostly benefiting venture funds and well-connected private investors.

Wonderland and its creator Daniele Sestagalli shot to popularity in November on the back of the successes of both OlympusDAO, an Ethereum-based algorithmic currency protocol that inspired Wonderland, and Abracadabra, an Ethereum-stablecoin lending project built by Sestagalli.

Sestagalli has since gained even more popularity in crypto circles by using a community-first approach in an attempt to bring value to protocol users. And the community is betting big on what Sestagalli touches: A Sestagalli proposal to take over Ethereum DeFi protocol Sushi in December saw the SUSHI token rise by as much as 10%, as earlier reported.

Sestagalli says DAOs can get better deals than venture funds because of their communities. “DAO can compete with VCs getting even better deal flow thanks to the value proposition of a Community of investors rather than a few suits,” he tweeted on Friday.

TIME’s price saw a brief bump up following Friday’s announcement but lost 3.2% in the past 24 hours amid a plunge in the broader market. TIME exchanged hands at just over $2,460 at the time of writing, according to CoinGecko.

DISCLOSURE

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Shaurya is an analyst/editor for CoinDesk's markets team in Asia.