The last part of 2021 saw the OHM-fork narrative reach absurd levels of euphoria. In some ways, you can argue it might have been the worst-case scenario for DeFi 2.0 projects still in development because, during the APY wars, they now have absurd expectations to meet, and a consumer base with little patience and plenty of other options.

The days of 27-digit APY and magically tripling your money in 72 hours are over. Admittedly, it was a fun ride while it lasted. I, myself, was in GalaxyGoggle and watched what, at the time, seemed like huge losses get erased almost overnight with 5-day APY at nearly 300%. There’s euphoria and then there’s what I felt watching my paper hands get redeemed and then burnt into dust all over again.

To be clear, these protocols weren’t necessarily wrong, morally, to implement such a strategy. These forks are at war with each other for capital and what we saw develop was an arms race of epic proportions but, eventually, dilution/inflation won out and everything came crashing down.

The jury is still out on whether these protocols can re-invent themselves in the long run, but inflation mountain is a tough road to hoe. GalaxyGoggle moved over to BSC, essentially did a 100-to-1 reverse stock split, slashed the APY and started over. Their team is competent/loyal enough to turn the ship around, but it won’t matter if the consumer base has lost interest.

What this has unfortunately created for new DAOs (like Magnet) is a landscape in which people are still searching for the “APY high” even though it has proven to be unsustainable.

This puts protocols like Magnet (with a clearly defined long-term perspective of incubating and building their own projects) in a precarious situation. Consumers are still, for right or wrong, looking for a quick buck.

I’ll just start by posting the chart so we can get that out of the way.

There’s a lot to unpack here and, the trouble is, most of Crypto Twitter and the corresponding consumer base can’t be bothered to understand the context or see the forest for the 4-day old trees. Let’s try to break this down:

You can read the full recap of this here, but I appreciate the transparency here. Price initially skyrocketing to $25 (and a corresponding $200M+ market cap) was unsustainable. A delay in the minting contract being confirmed compounded the issue and then, once it was confirmed, you had people minting at deep discounts during what was rapidly becoming a sell-off. Not ideal.

Now, I want to be clear, this isn’t the team’s fault from where I sit.

The concept/idea that they were going for was to avoid whales dumping all of their pre-sold token at once and tanking the price. In fact, given how the situation played out with the minting contract and initial spike, having no vesting lock on the tokens could very well have been a disaster. Now, it’s a slowly unfolding disaster (again, not irredeemable by any stretch of the imagination). Again, hindsight on these things is always 20/20.

What you have now is a situation of seven days with very little buying pressure and a price slowly ticking down towards backing (at the time of this writing, $MAG backing price is $1.25 with a token price of $1.60).

Add this to a growing negative sentiment from community sale buyers who initially thought they’d be buying in at a discount at $2.50 who now can’t even access their not-as-cheap-as-they-thought tokens for another three days, and you have something of a morale issue.

To give the team credit, they have gone out of their way (and also custom-wrote the bMAG vesting script) to make the experience of redeeming/staking these tokens as simple as possible. At some point, it’s not the developer’s fault if token holders cannot understand how to click two buttons.

The final issue with this is the fear that, even after seven days of slow bleeding, there will still be a dump on Jan. 9 when the vesting period ends that sends the price potentially below backing and risks activating the treasury for buybacks. Not an ideal scenario for the first week of existence and for a team that is already putting to a vote how to use said treasury to farm stablecoins.

To be very clear, that was painful to write. My intent with $MAG is to be honest in my assessment and not skew too much towards positivity or negativity, but to give you both angles of the situation. Now, to the hopeful side.

First, if you’re not in the $MAG discord, do yourself a favor and jump in. The team announced yesterday an initiative called the “Magvestathon”, where holders team up with other holders and come up with prospective projects to pitch to the developers for $MAG to invest in. Winners will be chosen soon and prizes are to be announced later.

This is the kind of DAO-like initiative that encourages me long-term and shows that, even despite the currently-bleak price situation, $MAG is staying true to its principles/fundamentals (they are, at their core, a SPAC looking to incubate and grow with other early-access crypto projects).

There are also apparently other updates to come regarding partnerships, which is exciting.

The team also is not wasting time in activating the treasury to earn yield, as mentioned earlier. This is especially prescient as the need for buybacks may, unfortunately, rear its head in the not-too-distant future should price dip as the 7-day vesting period ends.

There was some initial pushback on the choice of allocation for the treasury, but I don’t blame the team for essentially pre-picking the options for safe investment here, especially with how the market looks right now. You’re not going to throw 90% of your treasury that serves as the backing for your token into something risky, at least not right now.

The team has been clear from the outset about what they plan to do that makes them different from other DAOs and it doesn’t stop with simply investing 10% of the treasury into new crypto ventures.

Magnet is the first team I’ve heard of that actually plans to build their OWN projects and use them for revenue-creation. The team has mentioned recently that they have several already in the pipeline that will be essential to the AVAX ecosystem. Unfortunately, this news was overshadowed by a week dominated by scary price action.

Also, the team has even laid out in their document section things that they intend to launch. These are all goals aligned with a long-term vision, not a quick money grab.

The team has repeatedly also said that a wrapped version of $sMAG is imminent, which will give users the option to borrow against it. This has been widely requested and will hopefully be launched soon.

One of the DAO’s founders (Rev) initially worked in the TIME ecosystem and found the nature of that protocol to be too centralized around the control of one person. The goal from the outset with $MAG has been to create a true DAO with community involvement. Understanding this helps put the current situation in context and also frame the team’s confidence that the team will navigate currently choppy waters.

In reading that thread, I noticed a few things. Sure, there’s a bit of confusion at the current situation, but there’s also an unwavering confidence in the future of the project because the team knows what it is and will do whatever it can to see it come to fruition.

Now, does self-assuredness guarantee a new protocol’s success in light of a fickle/burned-out consumer base? No, of course not. But the team is confident in themselves, their ability and knows that Magnet needs longer than four days to bring its vision to reality.

Yes, this phrase is tossed around to an annoying degree and is largely a meme at this point. But with Magnet DAO (a protocol that clearly is NOT intended to be a three-week joyride through 100-digit APYs where a few lucky whales make out big and the rest end up with nothing), yes, we are still very early.

Buying the dip is a relatively simple concept and it’s mostly the same with DAOs. It goes against a lot of intuition and human emotion to dip your toes into something that everyone else is either 1) running away from or 2) unhappy with.

One of my favorite influencers on Twitter (Income Sharks) posted this yesterday and it’s still true:

The example he was using was Bitcoin’s situation last summer. If you refer to the chart I posted at the beginning of this piece, you can come to a similar conclusion.

The next four days will be big for Magnet as it looks to avoid dipping to below backing price. If it can get past this (and I have full confidence that it can), the team can bring more exciting things/plans to the forefront that are true to its core. That’s a situation where every Magnet holder will benefit.