[BIP-578] Engage Wonderland as a Service Provider

Service Providers Funding Proposals
1

PR with Payloads

Service Provider Name

Wonderland (defi.sucks)

Overview

We’re a group of developers, researchers, and data scientists with one thing in common: we all love building cool sh*t. DeFi sucks, but we are here to make it better.

Our mission is to discover, partner with, and empower innovators to create open, permissionless, decentralized financial solutions. We pledge to stand by our partners, working with and supporting them in every way possible.

We’re partners with some of the most relevant and successful protocols in web3, including Optimism, Aztec, Connext, Yearn, Reflexer, and more.

We think of Balancer as the leader in AMM innovation, with a history of building features that many other protocols adapt later down the road.

Leader(s)

Wonderland comprises a team of 30+ experienced developers and researchers, with Matias Nisenson as CEO and 0xGorilla as CTO. Find the whole team here: Squad - Wonderland

Adhere to [BIP-372] and the SP standards:

Yes

Domains of Operation:

Wonderland is a proficient web3-first development team with a lot of experience in cross-chain, automation, oracles, and DeFi, with a strong focus on smart contracts, front ends, and system design. We’re the team behind:

  • Connext optimistic roots: saving gas costs by 90% on the merkle tree.
  • xERC20: a standard for bridged tokens.
  • Keep3r Network redesign: we helped completely remove liquidity management devops costs.
  • Hai Stablecoin: the money-god mandate is to be everywhere, so we made a highly complex protocol as developer-friendly as possible for others to build on top of it and fork it.
  • Price: a permissionless and reliable oracle that provides safe token price quotes, showcasing what can be built on AMMs.

Our initial focus is on smart contract development for v3. We’ll bring every bit of the experience above to the table, helping Balancer lower its gas consumption and maintenance costs while having the best developer experience possible for those building on top of v3.

We understand Balancer has a mature ecosystem with multiple service providers and stakeholders committed to its success; we’d be more than happy to engage and collaborate with any of them in any aspect of the protocol where we can help.

Key Objectives & Success Metrics:

Development of Balancer v3:

For the past month, we’ve been working with Balancer Labs, getting to know the codebase and supporting some current developments around the upcoming v3 release. Some of the things we’ve done so far are:

  • Optimizing current design for gas efficiency.
  • Researching designs to support emerging token standards like the ERC4626.
  • Improving the test suite to provide a test-oriented approach.
  • Security patterns and helping reduce trust assumptions.
  • Providing feedback on upcoming peripheral products.

We believe code is art; you want every line to have a raison d’être, which can make it more gas-efficient and helps security auditors, or even users, to go through it and have a sense of what’s happening quickly, among other things.

Balancer as the tip of the spear in innovation:

We believe there’s a lot of innovation going on in the AMM space, like with the recent boom of hooks after Uni v4, research around Loss-Versus-Rebalancing, or the increasing relevance of aggregators. This is all in the spirit of having the best and most efficient experience for the liquidity provider and the end-user.

We want to help Balancer stay at the forefront of innovation and experimentation as a customizable and advanced AMM.

Keep in mind that as our collaboration with Balancer extends over time, our goals will evolve to focus on what’s most crucial for the success of the Balancer ecosystem.

What our current partners have to say

Don’t trust, verify. These are quotes from a few of our partners and founders who have worked with us for extended periods and can attest to our quality and commitment.

“Wonderland was wonderful to work with. They aren’t cheap but they do excellent work. They went above and beyond their assignment and even found & fixed a bug in a related system, following our communication guidelines for risk mitigation at every step. 10/10 would recommend.”

Ameen, founder @Reflexer

“Wonderland is an incredibly talented technical team that takes a radically different approach to how they work with protocols. They are a close partner & core contributor to the Connext ecosystem, taking a proactive leadership role in not only building, but also helping determine what the future of the network will look like. I strongly recommend them to anyone looking for a high integrity, high quality partner.”

Arjun, founder @ Connext

“The Wonderland team has been instrumental in helping us push the design space for Aztec and think better about the types of contracts that can be built on Aztec. They are knowledgeable, motivated, and efficient in their work.”

Joe, founder @Aztec

"Great working together, if I could, I would have them run the protocol full time, complete trust”

Andre Cronje

“I always enjoy collaborating with Wonderland. They have a wide understanding of the defi space, its needs and problems, and they have right skills to solve them. They’ve developed one of the most widely used plugins for Hardhat and are always willing to help the defi/Ethereum space.”

Patricio, founder @Nomic Labs

Length of Engagement & Budget:

We’re proposing a 4-year long engagement, starting March 14, 2024, with the following structure:

  • $30,000/month in USDC.
  • An allocation of 275,000 BAL tokens vested linearly over four years starting February 14.
  • A call option with no expiry for 175,000 BAL with a 30-day TWAP strike price at the time of approval of this proposal, vested linearly over four years.
  • Entity to exercise call options: OpCo / Foundation multi-sig at 0x3B8910F378034FD6E103Df958863e5c684072693.
  • Specific terms and conditions apply as per real-world contract which will be drafted by the foundation.
  • Quarterly updates under this thread for the duration of the engagement.

There will be a team of 4 full time developers working on Balancer, with additional support from Wonderland’s research team and the rest of the company.

Since our main expertise lies in code, that’s where we shine brightest. However, our incentives are perfectly aligned, and we’re fully committed to supporting in every way possible, including business development, communications, or security, whenever we have the capacity and it aligns with our capabilities. Rest assured, we’re about going the extra mile for our partners, always ready to contribute beyond our core if we can.

Termination terms

Both parties may terminate this agreement at any time effective immediately upon 15-days prior written notice to the other party due to any failure of either party’s obligations under what’s stated in this proposal. In this case, Wonderland would receive a partial payout of the monthly USDC transfer, and the DAO would execute a clawback on the BAL vested, starting from the effective date of termination.

ETH Address to Receive Funds:

0x74fea3fb0ed030e9228026e7f413d66186d3d107

Link to SLA (if going through the Foundation/Opco):

N/A.

Technical Specification:

Monthly USDC Transfer

Description: The Balancer DAO will do a monthly 30k USDC transfer to Wonderland.

Transactions:

to: 0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48 (USDC)
function: transfer(address to, uint256 value)
args:
	to: 0x74fea3fb0ed030e9228026e7f413d66186d3d107 (Wonderland)
	value: 30000000000 (30,000e6)

BAL Vesting

Description: The Balancer DAO will create a 4 year vesting of 275k BAL to Wonderland using Yearn’s Vesting Escrow.

Transactions:

  • First tx: Approve tokens to the Yearn Vesting Escrow Factory

    to: 0xba100000625a3754423978a60c9317c58a424e3d (BAL)
function: approve(address spender, uint256 amount)
args:
	spender: 0x200C92Dd85730872Ab6A1e7d5E40A067066257cF (Yearn Vesting Escrow Factory)
	amount: 275000000000000000000000 (275,000e18)

  • Second tx: Deploy Vesting Contract

    to: 0x200C92Dd85730872Ab6A1e7d5E40A067066257cF (Yearn Vesting Escrow Factory)
function: deploy_vesting_contract(address token, address recipient, uint256 amount, uint256 vesting_duration, uint256 vesting_start, uint256 cliff_length, bool open_claim, uint256 support_vyper)
args:
	token: 0xba100000625a3754423978a60c9317c58a424e3d (BAL)
	recipient: 0x74fea3fb0ed030e9228026e7f413d66186d3d107 (Wonderland)
	amount: 275000000000000000000000 (275,000e18)
	vesting_duration: 126144000 (4 years)
	vesting_start: 1707868800 (February 14th, 2024)
	cliff_length: 0
	open_claim: 0 (Only Wonderland can trigger the claim)
	support_vyper: 0

Transaction for claw back execution:

to: <Address of the deployed vesting contract>
function: revoke()

Tenderly Simulation: Tenderly Dashboard

BAL Call Option

The call option is a real-world contract which will be drafted by the foundation.

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what is the reasoning behind a 4 year long engagement? it seems a bit excessive to me to be honest, especially in this space.

also why the retroactive vesting per february?

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Hello @gosuto, thank you for the questions.

At Wonderland, we’re deeply committed to the long haul. Our core strategy is to forge lasting partnerships with key protocols, like Balancer, stepping in as core developers for, at least, four years. This approach not only deepens our expertise in the protocol but also lets us contribute to its strategic direction and discover opportunities that brief engagements might overlook.

This setup means Wonderland’s progress over the next four years is closely tied to Balancer’s success, naturally aligning our incentives for the long term.

We only win if Balancer wins.

The vesting starts at the date we started our trial period with Balancer Labs.

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4

Hello! Thanks for your proposal!

I want to touch the agreement duration point as well. We just had a new funding round for most of the Service Providers of the Balancer Ecosystem, and the longest ask was for the Balancer Foundation, with 1 year. I believe that this should be revised.

Which mechanisms are in place to assess the engagement? What if, after 9 months, one of the parties decide that does not want to continue? There is no prevision for these questions on the proposal.

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5

Balancer has had a history of SP’s that kind of rode out their whole engagement without contributing much. As a DAO, making decisons is hard. Making decsiions to not renew an engagement with an SP is very hard. Making a decision to break a running engagement with an SP seems like it would be almost impossible.

It is for that reason that we moved from 2 year funding cycles to quarterly, or half year funding cycles. Still many SPs do not provide regular reporting or transparency as to what they are doing. We are a DAO, and our voters give us a lot of leeway/rubberstamp much of our governance. It is essential that we have a high level of transparency in place, and the space for governance to actually decided stuff.

From the little I have seen so far working with Wonderland, you guys are a great team and have a lot to offer. I’ve seen other great contributors with a lot to offer fail to deliver at Balancer based on the context. I strongly agree with Gosuto and Jameskbh that a 4 year engagement is inappropriate.

On the other side of things, many if not most of the original team that built balancer has left. As a result, most of the team working today does not have that much alignment/vested interest in Balancer. This seems to me as another critical problem.

Could it make sense to focus on a 6 month engagement for USDC in this BIP, and then to come up with some sort of a program for vesting BAL/long term alignment that applies to all the contributors who have joined in the last coupe of years?

If we want to just do this for Wonderland, it makes more sense to rethink the structure. This is a large package and needs a bit more thought.

I also really hope that Wonderland will be a model SP that takes the time to talk about their work and provide transparency on the Forums on a regular basis.

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Hey @jameskbh, thanks for sharing your opinion. We understand the long-term nature of this engagement might be different to what the DAO is used to, but long-term collaborators is what we all should be looking for.

That being said, your final point is crucial: our standard Service Provider agreement allows any party to terminate the contract at any moment, provided they give a few weeks’ notice in advance. Additionally, the vesting schedule includes a clawback feature, enabling the DAO to easily reclaim any unvested assets up to that point.

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Thank you for the compliments and for sharing your insights, @Tritium! DAOs are inherently complex, each with its unique backstory, and we get it!

Our strategy is always focused on the long-term. If the incentives aren’t aligned for an extended period, we believe there’s little hope for success in the protocols we support. Our entire ethos is built around engaging with protocols over the long haul.

This doesn’t mean we receive an endless supply of tokens without any conditions. Quite the contrary, the DAO retains the ability to halt vesting and apply the clawback feature.

We also want to highlight that our strategy centers on getting tokens at a certain price, deploying our team to add as much value as we can to the protocol, ultimately looking to see these tokens be worth orders of magnitude more. This approach benefits everyone involved with the DAO, incentives are very aligned.

Regarding your point about involving all collaborators, it’s an interesting discussion that may be worth exploring, but it falls outside our current scope. Our role is to serve as core developers, striving to deliver maximum value to Balancer. Happy to add our input when that discussion happens though.

We are happy to send a quarterly report on this thread so that the DAO is aware of our work.

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Hey, gm wonderland team! Thanks for the proposal. Could you please edit to reflect recent changes to the SP template, acknowledging [BIP-372]? Thank you.

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The thing is, this BIP is not a signature of your service provider agreement. It is an agreement by the DAO to provide funding in exchange for work. The service provider agreement isn’t included in the BIP as far as I can see. I think most of the concerns here could be resolved if a few more things were added explicitly to this BIP.

1: In the length of engagement section - add the text in that says that the agreement may be terminated by either party with x amount of notice at any time. It wouldn’t hurt to add that performance of the engagement should be assessed at-least biannually and a BIP should be held to decide if the engagement should be continued.

2: In the Technical Specifications section for both USDC and BAL vesting - Explain what happens on Termination. For USDC are partial month payouts for the last month possible, or does termination happen at months end. For BAL vesting, state that a clawback of unvested BAL will occur on the date of termination.

3: The call option is mentioned in the Budget but not in the technical specifications. More clarity is needed.

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Just wanted to chime in to say that I’ve been very positively impressed by the work Wonderland did together with the smart contracts team at Balancer Labs the last few weeks.

All the members of Wonderland we interacted with were deeply knowledgeable about DeFi, Balancer and overall very good technical communicators with very good input/suggestions.

I personally think Balancer can benefit a lot from having another independent team of SC core contributors outside of BLabs.

As Balancer steps up to a new chapter with v3 I foresee a lot of demand for smart contract work to get dozens of new projects successfully building on Balancer. Wonderland could help not only with the core contracts of v3 but also ancillary and hooks/integrations work.

Maxis often ask BLabs to help on some specific SC work but our small team doesn’t have the extra capacity to support on all occasions. Having Wonderland able to step in for such projects could be a major win and allow Balancer to move a lot faster.

That said I think it’s a reasonable compromise for our DAO to make an exception and adapt to their 4-year engagement model. The fact that the engagement can be ended at any time by either side should give us enough peace of mind that they can’t rage quit/go rogue with a large position in our governance tokens.

Very much in favor of this proposal, though of course specific concerns raised by others should be addressed and commented on by wonderland as has been done so far.

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I can attest to this, having worked with them for quite some weeks now.

They have been able to understand the new codebase and make meaningful observations and contributions in a short time. It’s been refreshing to have an extra point of view outside the core team that developed the code from the ground up, as it allows us to question our design choices and find better tradeoffs in the long run.

Happy to see this is moving forward!

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We have updated the proposal following the latest template, and made explicit the call option and termination details. Thanks @0xDanko and @Tritium.

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Thanks, @Fernando and @juani. We’re excited and honored to be working with Balancer.

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All transfers from the DAO multisig(treasury) require governance. Therefore if there is no smartcontract is in place to facilitate exercise of the options, another BIP will need to be staged and approved by governance to initiate transfer of BAL from the treasury.

Who are you signing the contract with? Maybe the BAL should be transferred to that entity to manage the call option as part of this BIP, that would be the other workable option I can see.

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Thanks @Tritium for the background. We’ll pass this on to the Balancer team since we’re fine with any approach. We don’t have any particular demands on how it should be done.

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Hey Wonderland team, thanks for the proposal and fielding the above concerns.

I am curious, is Wonderland working with any other dexes at this time? If yes, in what capacity? I feel if the vested interest of Wonderland is for Balancer to succeed this would mean the protocol winning more market share, by several metrics, than it has today from competitor dexes. Will Balancer be the only dex Wonderland works with during this engagement ?

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We are currently not working with any other DEX, and we are indeed committed to the success of Balancer; you can see it in how the proposal is structured—the cash portion doesn’t really cover our costs, so we’re betting on BAL. However, given the engagement with our other partners, there’s a chance we’ll have to interact with other DEXes in some form or capacity.

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I have been more involved in recent months with supporting v3 design and saw how engaged the Wonderland contributors are. Their expertise in smart contract design has already led to significant changes on how we will approach the upcoming release of v3. For full disclosure: I have also helped them in writing up the initial draft of this proposal and how to best align their and the DAOs interests.

Although this engagement is different from the classical 3-6 month or 1 year proposals we usually see here, I don’t see any issues with this setup as it should be clear that it could be terminated at any given time through governance (be it USDC pay, the vesting contract or the call options as written now in their termination terms). As long as this is a given, there is minimal risk associated with the rather long engagement ask of 4 years as @Fernando
has already stated.

The upside of having a team of SC experts shipping and improving on the v3 code-base is much larger than any potential downside this engagement might have.

To summarize what we have discussed so far, following adjustments should be present in the BIP and then we are good to go to governance IMO:

  • Clear specifications on the start of the 30 day TWAP strike price that will be included in the real-world contract with OpCo / foundation. Also provide a minimal specification which entity is managing those funds (ideally the OpCo / foundation wallet) as per @Tritium request.
  • clarify how the claw-back with the yearn vesting contract works

For the first point I suggest the following:

  • A call option with no expiry for 175,000 BAL with a 30-day TWAP strike price at the time of approval of this proposal, vested linearly over four years
  • Entity to exercise call options: OpCo / Foundation multi-sig at 0x3B8910F378034FD6E103Df958863e5c684072693
  • Specific terms and conditions apply as per real-world contract which will be drafted by the foundation
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Hello @Xeonus, thank you for the words an suggestions. The proposal has been updated with your suggested clarity improvements to the call option terms, as well as the code snippet for the claw back and Tenderly simulations for all of them.

Note that code snippet requires the vesting address, which will only be known after it has been created. We’d be happy to update the snippet after the contract deployment.

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https://snapshot.org/#/balancer.eth/proposal/0x9fe1a6db598e3224b84219228becf87861a29e8e6ae0409c66dde5e67c4919c2

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