How to stake Wonderland (TIME)

How to stake TIME and go down the rabbit hole of Wonderland to receive high-yield from an ambitious experiment on Avalanche

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Wonderland aims to become the first decentralised reserve currency protocol that underpins all future NFT and GameFi projects built on the Avalanche blockchain. The reserve currency, TIME, has been known to offer extremely high-interest rates, with APYs reaching into the tens of thousands.

Traditional stablecoins are often used by investors to avoid the volatility of cryptocurrencies. However, the developers of Wonderland say that traditional stablecoins still suffer due to the depreciation of the US dollar. As a result, Wonderland has created a non-pegged reserve currency called TIME.

TIME is backed by Wonderland's treasury, which is composed of a basket of decentralised assets, including the Avalanche-based MIM stablecoin and Ethereum. This gives TIME a floor price or bottom value. Currently, the treasury is operated by a team of developers but the team hopes to convert the protocol into a community-owned decentralised autonomous organisation (DAO).

To support the Wonderland protocol, investors can stake TIME tokens in return for rewards. Rewards are generated in 2 ways; selling 'bonds' of TIME tokens and profits from the treasury. These profits are then distributed equally among stakers.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade.

How does staking $TIME in Wonderland work?

Staking is often described as a method that allows investors to earn rewards from cryptocurrency assets.

While, technically, the process involves locking tokens within a Proof-of-Stake blockchain to help validate transactions, many protocols now offer users the opportunity to earn rewards through a variety of other mechanisms. These mechanisms are still often referred to as staking.

To encourage adoption and generate liquidity for Wonderland, the protocol employs 2 key mechanisms - staking and minting. While minting is a way to generate profits, staking is a method to incentivise liquidity provision.

Minting TIME tokens is achieved through a 'bonding process. Liquidity provider tokens or other digital assets are sold to the Wonderland protocol in exchange for TIME. TIME is sold at a discount to market rates the Wonderland protocol, which incentivises buyers. This boosts the treasury's reserves. Profits that are collected from minting are then distributed to stakers.

Staking involves locking TIME tokens within the Wonderland protocol. In return for locking away liquidity and, therefore, again boosting the protocol's treasury, investors can earn a compounding return on investments.

For every TIME token staked, a token called MEMOrie (MEMO) is created and sent to the liquidity provider. This is a liquidity provider token and is used for the distribution of rewards. It is pegged to the value of TIME.

Like Olympus DAO, on which Wonderland is based, the mechanisms implemented are known as "(3,3)" and utilise game theory to ensure stable growth of the protocol, while stakers enjoy high yields.

Rebasing

Every 8 hours the Wonderland protocol distributes profits by sending new TIME tokens to the staking contract. However, this results in an imbalance between the amount of TIME and the amount of MEMO - after all, the two are meant to be pegged 1:1. As a result, a rebase is required to correct the difference.

The rebase brings the supply of TIME:MEMO back to 1:1. The supply of MEMO is increased to match the new supply of TIME.

All rebases occur retroactively, meaning that it happens 8 hours after profit has been generated. This delay means that users can see what APY they will receive at the end of the next 8-hour window. With this delay, users can see what rewards they are set to receive.

How to stake TIME in Wonderland

The Wonderland protocol exists on the Avalanche blockchain and, therefore, you will require native AVAX tokens to complete the staking process and pay for any associated gas fees. You will also need access to a Web 3.0 cryptocurrency wallet, such as MetaMask. For more information on cryptocurrency wallets, check out our guide here.

Below are instructions that will show you how to purchase TIME through a DEX and then stake it using the Wonderland website.

Step 1. Purchase AVAX. To purchase TIME using a DEX on the Avalanche blockchain, you will first need to buy AVAX from a centralised exchange, such as Binance, Kucoin or Coinbase. If you already have cryptocurrencies such as BTC or ETH you can swap these for AVAX. Alternatively, you can purchase AVAX on some exchanges using fiat currency.

Check out a list of exchanges that sell Avalanche (AVAX) here.

Step 2. Establish a connection between Web 3.0 wallet and Avalanche. If not set up, you can easily set up the MetaMask extension here. Remember to keep your mnemonic phrase safe and don't ever share it!

To set up a connection between the Avalanche blockchain and your MetaMask wallet you will need to input a set of connection details. Click on your MetaMask extension. Click the Network drop-down in the top middle of the extension. In the menu, select the 'Custom RPC' option. Enter the following details:

Note: these details may get updated in the future - so try to verify these with the Avalanche Network.

Once a connection to the Avalanche network has been established, ensure you have added both TIME and MEMO token symbols to MetaMask so you can view your holdings in the future.

Huobi sign up

Step 3. Create an Avalanche wallet. Once you have established a connection with the Avalanche blockchain, you will now need to create an Avalanche wallet on the network so that you can send digital assets (AVAX) from your centralised exchange. This will act as a bridge between your centralised cryptocurrency exchange and MetaMask.

To set up an Avalanche wallet, head over to https://wallet.avax.network/ and click 'Create New Wallet'. Follow the on-screen instructions.

Just like MetaMask, remember to store all of your key phrase information securely.

Huobi sign up

Step 4. Withdraw AVAX from exchange to Avalanche wallet. Go back to the centralised exchange you used to purchase AVAX. Withdraw AVAX to the Avalanche wallet you set up in step 3.

Tip: send a small amount to the wallet to check it's the right address.

Step 5. Send AVAX from Avalanche wallet to MetaMask wallet. Before transferring AVAX to your MetaMask wallet, you first need to send AVAX coins between the multiple Avalanche chains - each chain is used for different processes.

Within the Avalanche wallet click the "Cross Chain" menu on the left. Select "X-CHAIN" as the source chain and "C-CHAIN" as the destination chain. Then enter the number of AVAX tokens you wish to transfer. When happy, click 'Confirm'.

Huobi sign up

Once assets have been moved to the C CHAIN, click the "Send" menu on the left of the Avalanche wallet screen.

In this window, select "C" as a source chain, and then enter the amount of AVAX you would like to transfer. Next, go to your MetaMask wallet and copy your AVAX address - the address can be copied to the clipboard by clicking the address symbol. Make sure your MetaMask wallet is still on the Avalanche Network.

Back within the Avalanche wallet, paste the address into the 'To Address' field.

Tip: send a small amount to check it's the correct address.

Once happy with all of the details click 'Confirm'.

Step 6. Swap AVAX to TIME. Using an Avalanche-based DEX, such as Traderjo.com, you must now swap your AVAX tokens to TIME for use within the Wonderland protocol.

Tip: Don't swap all your AVAX to TIME, leave some aside for fees (like 0.05 AVAX)

Step 7. Stake TIME within Wonderland. To stake your freshly bought TIME, go to the official Wonderland website. First, connect your MetaMask wallet - this will require authorisation from inside your MetaMask.

Once connected, select "Stake" in the menu on the left-hand side of the website.

Huobi sign up

Enter how much TIME you would like to stake, and confirm the transaction by clicking "Stake". The transaction will also need to be authorised via your MetaMask wallet. This transaction will incur AVAX gas fees.

Once the transaction has been processed across the Avalanche blockchain you will officially begin staking TIME tokens within the Wonderland protocol. In return for staking TIME tokens, you will receive MEMO, which is the 1:1 liquidity provider token of TIME.

MEMO is a transfer-restricted rebase token, meaning that it cannot be traded or used for anything except holding and receiving rebase rewards. The purpose is that by distributing MEMO, TIME supply is unaffected until MEMO is unstaked. It is a bit like a coupon that entitles you to rewards, but can also be used to redeem your TIME at any time.

Rewards from the Wonderland staking protocol will be accrued every 8 hours.

How much can you earn by staking $TIME in Wonderland

The amount that can be earned for staking TIME within Wonderland will vary based on a number of factors. These factors include how much you deposit in the protocol, how much the price of TIME varies and how many others decide to stake their TIME tokens within the protocol too.

While APY rates may be initially high, as more people begin to use the protocol, APY rates are likely to decrease as the stability of the platform improves. TIME is also classified as an inflationary token - as more TIME is generated each day through minting, the scarcity of TIME is likely to decrease. With that being said, the high APY staking returns should mean that you still come out with a profit even if the price of TIME falls.

At the time of writing (December 2021) the current APY is 72,300%, which is not uncommon.

Is staking $TIME safe?

Wonderland has been operating for approximately 3 months (as of December 2021), which means it has not yet stood the test of time. While there have been no mishaps to date, the protocol does have 1 or 2 risks that some investors may interpret as red flags.

The code for the protocol is based on an Ethereum-based application called Olympus DAO, which itself has only been operating for approximately 9 months. However, unlike Olympus DAO, the code for Wonderland has not been fully audited. Wonderland is quite open within native documentation that its protocol has not yet been audited.

Encouragingly, both Wonderland and Olympus DAO have not sustained any notable hacks or security breaches. In its short lifetime, the protocol has actually managed to accumulate a total value locked of US$1.5 billion - which is impressive over such a short period. However, the developers behind the application have remained anonymous - the leader is known as Daniele but true identities have not been revealed. While it is driven by the community, all of whom are working together to improve the protocol, the lack of clarity regarding leadership may turn some investors away.

Like all DeFi applications, the protocol will be subject to unknown risks, such as smart contract bugs or exploits. While there are no clear warning signs related to Wonderland, as with anything in crypto, only invest what you can afford to lose.

Verdict

With any new investment tool, especially within the cryptocurrency industry, the risks are naturally higher. This is especially true for something as experimental and ambitious as the Wonderland protocol. With the continued success of the Avalanche blockchain, success for a decentralised reserve currency protocol such as this may follow.

However, it is extremely important to weigh the risks, the rewards, and determine your tolerance for newer investment technologies. Early Wonderland users may be rewarded for taking the additional risk.

Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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