Over the past few weeks, it’s been a wild ride in the Crypto Twitter and DeFi communities. The rollercoaster started when CoinDesk disclosed that one of the co-founders of the famous Avalanche-based automated money market (AMM) Wonderland, pseudonymous “Sifu,” was Michael Patryn.
Despite Patryn’s shady past, prominent co-founder Daniele Sestagalli knew who “Sifu” was but chose to offer him a “second” chance. But, members of the Wonderland community on Twitter did not share the same sentiment as Sestagalli.
As a result, Sestagalli’s reputation has taken a significant hit in the past week. And upon further investigation into his background, things only look worse for the embattled co-founder. This leaves us with the question: What’s next for Wonderland? Before we dig into Wonderland’s future, let’s take a look at Danielle Sestagalli.
Who is Danielle Sestagalli?
Daniele Sestagalli, also known as Danielle Sesta, has extensive experience in the blockchain industry. In several interviews, he has indicated that he began using Bitcoin in 2011. The crypto world didn’t know much about him, but his Zulu Republic project impacted the crypto industry in 2018. It was one of the first airdrops, giving around $30 million to over 500,000 people. The project’s website is now defunct.
The Zulu Republic is a digital ecosystem based on the Ethereum blockchain, focused on believing that decentralized finance is the future human protocol. With an emphasis on unrivaled user experience, the objective was to make it easier for people to join the cryptocurrency revolution, empowering them to take control of their own financial lives. There have been no updates on the projects pages since 2018.
Sestagalli ‘s Linkedin profile shows that he also was an advisor to Bancor from July 2017 to September 2018. Bancor is a decentralized liquidity network that allows you to hold any blockchain asset and convert it to any other asset in the network, with no counterparty, at an automatically calculated price, using a simple web wallet.
In July 2017, Bancor completed one of the most significant token sales, raising $153 million. The project was met with a lot of hype and excitement but failed to live up to the expectations.
By the beginning of 2021, Daniele Sesta appeared busy creating a music industry model that would benefit musicians and the industry. The aim was to establish a blockchain foundation for everyone working in the music industry.
The Utopia Genesis Basis was to carry the blockchain to the music industry. The idea behind it was to empower artists by a platform that permitted them to subject their tokens without intermediaries.
However, it is not clear how much progress was made on this project as there is no website or social media presence for Utopia Genesis Basis.
But, all of a sudden, Daniele Sestagalli diverted his attention elsewhere and re-appeared with three items that changed the blockchain sector; Popsicle Finance, Abracadabra, and Wonderland entirely.
Unknown people hacked Popsicle Finance for tokens worth more than $25,000,000 at the beginning of August 2021. It was a major hack, and the price of the $ICE token crashed as a result.
Abracadabra is a DeFi yield farm that allows you to stake your cryptocurrency and earn interest on it. The protocol has been live, having over $200 million worth of value locked in it.
In September, Sestagalli founded Wonderland. According to a November interview, Sestagalli originally envisioned Wonderland as a perpetual, “mega-ICO,” giving tokens to holders over time and developing a treasury, as an Olympus fork DAO — an infamous, sky-high APY rebasing project commonly criticized as unsustainable.
Wonderland eventually overtook Olympus in market capitalization and treasury size.
The Fallout of Wonderland
In January 2022, blockchain sleuths reported “Sifu” as Michael Patryn. According to the report, Michael Patryn is allegedly a skilled serial scammer, with a sentence and deportation on his record. Patryn was the co-founder of QuadrigaCX, a failed Canadian cryptocurrency exchange.
QuadrigaCX, a crypto exchange created by Gerald Cotten and Michael Patryn in 2013, quickly grew to become one of Canada’s largest crypto exchanges by trading volume. According to sources, Cotten died in December 2018 during a trip to India, after which over $190 million in cryptocurrency owed to 115,000 consumers went missing.
Officials at QuadrigaCX claimed that only Cotten had access to the secret keys containing millions of dollars worth of client cash. However, crypto circles quickly labeled the entire incident as an exit scam.
Patryn had remained under the radar since then, until a few weeks ago, when he was discovered to be one of Wonderland’s architects.
“Sifu,” a co-founder of the Olympus, made the DeFi project, Wonderland, what it is today.
With the wonderland team’s help, including his partner Danielle Sesta, Michael Patryn (Sifu) made seed investments in the Olympus project making significant, unilateral investments. Wonderland being the fork of Olympus, overtook it in every aspect.
In particular, the wonderland co-founder, Sestagalli, popularized the idea that Frog Nation investors will someday compete with and replace “the suits,” a term that refers to established investment funds.
However, the Olympus project has come under fire in recent weeks due to the wonderland saga. There is a devastating drop in both the original project and its forks. Wonderland dropped by as much as 40% in 24 hours after Sifu’s unmasking as Patryn, tumbling as far as 95% from its all-time high.
With Patryn’s revelation, the already weak price action suffered another blow after Sestagalli stated that he had known Patryn’s identity and connections to QuadrigaCX but opted to work with him as the treasury manager nevertheless. The dynamic caused wonderland investors to lose faith in the project.
A few days later, the “frog nation” leader, Sestagalli, stated the path forward; “Do we wind down or continue to fight for the aspect of an investment DAO [decentralized autonomous organization] being a revolutionary new organization? For the option that I am for, which is to fight and replace Patryn with someone new and experienced to manage the treasury.”
The information caused a lot of commotion with community members who refer to themselves as the “Frog Nation.” Although Patryn was relieved of his duties, the question remains; what will become of Wonderland’s treasury?
What’s Next for Wonderland?
In light of the recent revelations, what will happen to Wonderland is unclear. The crypto community is up in arms, and wonderland investors doubt the wonderland treasury.
Although Danielle Sestagalli actively worked with a convicted felon, a community vote to shut down Wonderland and distribute the treasury to investors failed to pass a few days ago.
The outcome of votes may programmatically and automatically prompt actions on-chain, such as changing the code for a protocol or triggering treasury payments, depending on the decentralized autonomous organization (DAO) governance model.
Wonderland’s developers designed the protocol of DAO to protect against a single bad actor. However, in this situation, the majority of the community desires that the Wonderland team can hypothetically choose whether or not to enact.
This scenario heightened tensions in the crypto community when Sestagalli appeared to imply that Wonderland would close regardless of the outcome of the “Wind down Wonderland” vote.
A few days later, the vote concluded with 55 percent of the token weight in favor of the project moving on. Also, time token holders agreed to give the team a chance to make some changes in the project.
It was possibly the most active governance proposal in DeFi history, with over an overwhelming majority voting to continue the project, defeating a considerably smaller number of opposing addresses. Danielle Sestagalli, in turn, wrote in discord that the wonderland team was taking time to “compile suggestions, and determine the best path forward.”
The problems at Wonderland and the consequences show the fundamental flaws with the DeFi administration, which frequently relies on anonymous or pseudonymous oversight from a small number of critical people. Though smart contracts automatically execute various decisions when certain circumstances arrive, the financing of such projects is typically left in the hands of people with little checks and balances.
However, DeFi supporters should use this opportunity to reflect on how to prevent anything this egregiously audacious from happening again. Wonderland DAO agrees!
What’s Left of Danielle Sestagalli’s Name?
In the decentralized financial world, Daniele Sestagalli made a name for himself through his work. He is the brains behind three of the most successful DeFi initiatives, with a combined market worth of 6.5 billion dollars (including MIM) and a total value of 6.7 billion dollars. By market capitalization, MIM is also the 6th largest stablecoin in the Sestagalli ecosystem.
The recent news has taken away a big part of Sesta’s success. Sestagalli’s reputation has taken a significant blow, regardless of what happens to Wonderland. His noble associations with a convicted felon who faced financial crimes will not help him salvage his name.
Michael Patryn is dragging Danielle Sestagalli’s name in the mud, and it doesn’t look like it’s going to get any better from here. Can the crypto community trust Sestagalli to lead any future projects?