Wonderland.Money - Is Getting 80,000% APY Really Possible?

Investing in crypto offers some pretty amazing opportunities to make profits. In traditional finance, a possibility of 70,000% APY would straight away ring alarm bells (to say the least ;-). But in the world of crypto and DeFi, such gains are not unheard of. There are various DAOs (Decentralised Autonomous Organisation) within the DeFi sector that offer crazy APYs as a reward for staking. For example, Wonderland, Olympus, or Jade Protocol. In this article, I will look in more detail at Wonderland as I’m the most familiar with this particular DAO.

Below is a screenshot of Wonderland’s page. As you can see, it currently offers APY around 81,000% and it’s been varying in the past from over 60,000% to around 90,000%. You can receive it by staking your TIME tokens and the rewards are paid out in MEMO (Memories) tokens, which are an equivalent of TIME.

Here are three very important points:

The price of TIME token can fluctuate a lot.

Since the initial move up, the price has been in the 800 – 10,000 USD range, so it's fair to say that there's been a fair bit of movement there. It has to be said though, that the recent dip coincided with an overall dip of the crypto market, so we could speculate that the price would probably stay much more stable if the whole market didn't dip.

The founder’s argument is that long-term the price won't really matter as you will earn so many TIME tokens in interest that any drop in price will be covered by additional tokens. This certainly makes sense in theory, but the APY can change.

We’ve seen it go as low as around 60,000% and as high as well over 80,000%. As long as APY doesn’t drop by order of magnitude, everything should be fine ;-) So far it’s been looking quite promising. But there’s one caveat when it comes to this crazy high APY: It’s only achievable as a compounded interest.

If we take 70,000% APY as an example (I will round up the numbers a bit), it’s not 70,000% from day one of your investment, but rather, it’s a compounded interest of approximately 2% per day. In other words, it’s an exponential increase, so initially, your gains will be minimal – if the APY and the price stay relatively constant, you can expect around 10% gain after 5 days and you can double your money after around 40 days. And then it will double every 40 days.

Let me illustrate it with an example – 1,000 USD investment with the assumption that the APY and the price of TIME token will remain relatively stable (it’s a BIG assumption). The numbers are rounded up a bit.

0 days – 1,000 USD

40 days – 2,000 USD

80 days – 4,000 USD

120 days – 8,000 USD

160 days – 16,000 USD

200 days – 32,000 USD

240 days – 64,000 USD

280 days – 128,000 USD

320 days – 256,000 USD

360 days – 512,000 USD

So from 1,000 USD to over half a million in less than a year. As you can see, not so much is happening in the first 2-3 months, but things start picking up quite rapidly later on.

And this is the key point – a project of this type will collapse if too many participants decide to unstake at the same time. You can unstake at any point, but you’re missing out on those huge potential gains, so the perspective of rewards for staking longer is supposed to keep the majority of participants.

Of course, with a project like this, there are no guarantees about what will happen and the risk is huge. I actually invested in Wonderland as an experiment – you can check out my video about it here. When I created this video, I also said that I will make a follow-up video after around 40 days, when in theory I should double my investment. You can find this video here to see how it went... although I certainly didn't expect a major market dip! ;-)

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Disclaimer

The content covered in this article is NOT to be considered investment advice. I’m NOT a financial adviser. These are only my own speculative opinions, ideas and theories. Do NOT trade or invest based purely upon the information presented in this article.