Red Monday: WILD Flash Crash AMA

The Spaces addressed a severe flash crash and liquidations linked to Wilder World’s integration with the Peapods lending/LP protocol. Frank and Neo emphasized it was not a hack or internal exploit, and provided a transparent chronology: a 20M WILD treasury allocation to Peapods at 2x default leverage, subsequent debt build-up as price fell, a $3M buy-wall attempt at $0.20, and a cascading run as lenders converted PFUSDC into P‑long WILD and sold into the main market. They outlined three key learnings about default debt liabilities, asymmetric downside due to fractionally backed synthetic PFUSDC, and lender exit mechanics that amplified sell pressure. Impact included an estimated ~10% of supply liquidated, a temporary ~99% drawdown, followed by recovery to ~$0.08–0.09. The team takes responsibility, pauses the Peapods partnership, and is reviewing treasury risk policies. Despite the event, Wilder World reports 12+ months runway, access to ~$10M hard assets, ~50M WILD in treasury, growing user metrics (97% WAU growth; ~40k daily Z‑chain tx), and near-term product catalysts (Metropolis burn live, Packs, open world invites in December). A follow-up Spaces will focus on roadmap, with the community’s strong support cited as a key stabilizing force.

Wilder World Spaces AMA — Flash Crash, Peapods Liquidations, and Path Forward

Participants and roles

• Neo (core team, primary explainer of events; takes accountability for decisions made around Peapods)
• Frank (core team, host/co-lead; sets context, addresses community and next steps)
• Casper (community/host/moderator; curates questions from X/Typeform)

Executive summary

• What happened: A severe flash crash was triggered by cascading liquidations in the Peapods lending/LP pool that held a large Wilder World (WILD) position. This was not a hack, exploit, or internal wrongdoing.
• Immediate impact: WILD price briefly crashed ~99% intraday before rebounding to ~$0.085 by the time of the call. Roughly 10% of total WILD supply was forced onto the market via liquidations. Holder count rose ~3.5% as supply redistributed to community buyers.
• Treasury and runway: Project remains solvent and operationally strong with 12+ months runway, no debt, ~$10M in accessible hard assets, and >50M WILD across entities/foundation. A cumulative ~$9M of buybacks were previously executed from treasury (prior to this event). DAO treasuries currently show ~$2.8M (value fluctuates with WILD price).
• Root cause and learnings: The team misjudged tail risks and several mechanics of the Peapods protocol (default debt accrual in LP, fractional PFUSDC backing, and lender-exit mechanics that convert debt to synthetic WILD and sell into the main market). Neo took full accountability. The Peapods protocol’s own official pod experienced a similar failure on Oct 10, highlighting broader systemic risk.
• Actions taken: The team attempted to defend $0.20 with a $3M buy wall; left ~$2.2M in-pod liquidity; later secured ~$1.9M to multisig, and deployed ~$500K for opportunistic buys around $0.05–$0.06. Peapods partnership is paused while both teams continue discussions.
• Near-term focus: Transparent postmortem (published “zine”), further data validation (exact liquidations/flows), risk policy tightening, and returning focus to product/economy launches: Metropolis burn mechanics live; “Packs” next month; Open World invites around Dec 6/16; steady user and on-chain activity growth.

Project state and momentum (context before the event)

• User/activity growth since mid-September:
  • Weekly active players in Super Early Access: +97%
  • Z-chain daily transactions: ~40,000/day and growing (proxy for in-game/on-Zero activity)
• Roadmap milestones:
  • Final Frontier roadmap launched; multiple releases planned through year end
  • Open World invite waves targeted: Dec 6 and Dec 16 (mid-to-late December seen as the most significant moment to date)
  • Metropolis tokenomics upgrade shipped (burning mechanism live)
  • Upcoming: “Packs,” Avatar creator showcase this week, Dailies/Daily Wild claim live; more economy papers once systems are fully integrated

Detailed chronology of the Peapods episode

• Sep 3: Wilder World announced integration with Peapods. Rationale:
  • Transition away from high-reward, inflationary staking toward in-game Metropolis economy
  • Offer WILD holders borrowing utility; deepen token liquidity; generate yield via Leveraged Volatility Farming (LVF)
  • Use idle treasury tokens productively and support planned larger market buys with deeper liquidity
• Treasury deployment and LP mechanics:
  • ~20M WILD from treasury staked into a Peapods pod (community whales also added)
  • Default state creates a 2x leveraged, full-range LP (like a Uniswap v2 AMM), pairing WILD with synthetic PFUSDC minted via Balancer flash loan
  • Team also “over-borrowed” moderately (considered reasonable at the time) to conduct market buybacks of WILD
• Market shift and rising hidden liabilities:
  • Mid-Sep: WILD ~ $0.33; later dipped to ~$0.27 and eventually ~$0.20
  • As price fell, the LP programmatically bought WILD using debt, accumulating a ~$3M liability. The team initially underestimated the pace and magnitude of this debt accrual.
• Three critical learnings (root cause mechanics):
  1. Default debt liability in the LP: Even at “just” 2x, a full-range AMM buys WILD as price falls using debt, rapidly ballooning liabilities during drawdowns. Apparent trading “fees” did not offset this in practice.
  2. Asymmetric downside protection due to PFUSDC fractional backing: PFUSDC (the synthetic USD side) is not fully backed and backing is variable (could be zero). In a stress scenario, a “run” on the pod can occur when lenders withdraw and the market cannot absorb sell pressure.
  3. Convertible debt receipts/lender exits: Lenders could withdraw and convert obligations into synthetic p-long WILD, then sell on the main market. This exit flow can undercut defenses and accelerate liquidation cascades.
• Defensive measures and cascade:
  • Team withdrew ~$3M from pod liquidity to build a $0.20 buy wall; left ~$2.2M in-pod liquidity
  • Within ~24h, ~$500K of the buy wall was consumed (mostly via Peapods lenders exiting, not community sellers)
  • To manage risk, pulled $1.9M to multisig, retained a smaller live buy defense ($500K), and attempted to support by buying WILD and replenishing liquidity. However, lender exits converting to synthetic WILD continued, pushing price lower and triggering automated liquidations.
• Liquidations and immediate aftermath:
  • Large-scale forced selling (estimated ~10% total WILD supply at peak) hit the open market
  • All sides in the pod structure suffered: both lenders (USDC side) and WILD stakers saw extreme losses (Nuances exist in exact recovery by role, but practical outcome: “everybody got wrecked”)
  • Note: Peapods’ own official pod suffered a similar blow-up on Oct 10, reinforcing structural risk concerns
  • Post-crash: The team executed ~$500K in opportunistic treasury buys around $0.05–$0.06. Price rebounded to ~ $0.085 by the time of the call; additional supportive buying from community and investors was observed

Treasury, DAO, and financial position

• Core project:
  • Runway: 12+ months at current burn
  • Reserves: ~$10M in accessible hard assets for emergencies; >50M WILD across entities/foundation
  • Debt: None
  • Prior buybacks: ~ $9M total executed from treasury prior to event
• DAO treasuries:
  • Publicly visible at app.wilderworld.com; snapshot around ~$2.8M (subject to WILD price fluctuations)
  • ETH→WILD swaps: When WILD was higher (e.g., $0.50), swaps looked favorable; with current price, marked down — future recovery depends on WILD repricing
• Exposure and losses:
  • Team/DAO wallets had Peapods positions; approximately ~50M WILD liquidated across team/DAO exposure. Team is evaluating buybacks/mitigations; ~$1.9M remains under multisig, deployment under consideration
• Policy direction under discussion:
  • Community suggestion: Treat Treasury as sacrosanct capital (no derivatives/leverage). Team is open to this; may advance to a DAO vote. No commitment yet, but sentiment is to tighten risk policies materially

Partnership status and fundraising

• Peapods partnership: Paused. Teams are engaged in cordial, constructive discussions; focus on postmortem, risk remediation, and potential architectural changes before any future integration
• Fundraising (Cipher): Market conditions and internal priorities led to a tactical delay. Focus is on shipping Open World/Packs, near-term revenue, and revisiting a raise in a stronger position (potentially ~6 months). Goal: Achieve profitability within ~6 months post-Packs/Open World if execution aligns

Price stabilization and market approach

• Observations:
  • Despite an “existential-level” shock, WILD rebounded to ~50% of pre-crash price within 24 hours
  • Significant community/investor support emerged, including opportunistic accumulation at distressed levels
• Approach:
  • Allow a few days for price discovery and stabilization
  • Deploy remaining defensive capital judiciously (no final deployment decision announced)
  • Focus on fundamentals: shipping features, expanding on-chain/game activity, growing user base, and economy sinks/sources to buttress token value over time

Q&A highlights and team responses

• Why choose Peapods (a newer, riskier protocol)?
  • Intent: Reduce inflationary staking, enable borrowing utility for WILD holders, deepen liquidity, and earn non-dilutive yield via LVF
  • Acknowledgment: Went too big too fast; underestimated tail risks and certain protocol mechanisms
• The $3M buy wall at $0.20 — why?
  • Aim: Defend a historically strong support level and prevent cascade liquidations that could “blow up” the market structure
  • Outcome: Lender exit mechanics consumed the wall; defense became untenable; actions pivoted to risk containment
• What happened to funds on Peapods after liquidation?
  • Practically, both WILD stakers and USDC lenders suffered severe losses; the liquidation process design likely transferred value to arbitrageurs rather than back to LP stakeholders
• DAO/Treasury transparency and runway
  • 12+ months runway; >$10M accessible hard assets; >50M WILD in treasury; no debt
  • DAO treasuries visible on app site; current marked value reflects WILD price
• Will the team avoid leverage/derivatives with treasury assets?
  • Strongly considering restrictions; may bring to DAO vote. No immediate irrevocable commitment announced
• How much WILD from team/DAO got liquidated?
  • Approx. ~50M WILD. Team is assessing whether, when, and how to repurchase given remaining capital and market conditions
• New exchange listings (e.g., Binance, Bybit, Bitget)?
  • The question was raised; no concrete announcements provided during this session
• Consultants and risk assessment?
  • No third-party risk consultant was engaged. Key lesson: go slower, deploy smaller, and prefer simpler, proven mechanisms; limit reliance on complex, under-tested systems
• Roadmap/economy updates (tokenomics):
  • Metropolis burn is live; Dailies and other sinks running
  • “Packs” launch next month; Avatar creator demo this week; economy papers to follow as integrated systems mature
• Team morale and commitment:
  • Despite “code red” stress, morale is strong; community support galvanized the team
  • Commitment: Keep shipping, stay lean, generate revenue, and let fundamentals re-anchor value

Key lessons and safeguards going forward

• Risk and deployment discipline:
  • Do not commit large treasury sums to novel/complex mechanisms without extensive stress testing and staged rollouts
  • Assume lender exit liquidity can vanish in stress; avoid dependencies on fractionally backed synthetics for critical defense
  • Prefer hard, observable backstops and simpler primitives for liquidity/borrowing
• Product-first stabilization:
  • Prioritize utility and sinks tied to actual gameplay creation, earning, and asset markets
  • Grow a broad economic base (goods and services within the world) to distribute risk across many actors versus balance-sheet interventions
• Communication and accountability:
  • Continue transparent reporting (postmortems, data), regular Spaces/updates, and community-inclusive governance (e.g., DAO votes on treasury policy)

What to watch next (near-term)

• Follow-up Spaces: A second session focused on the future/product pipeline and the next ~45 days
• Zine/postmortem updates: More precise numbers on liquidation flows, counterparties, and any remaining overhangs
• Product milestones: Packs, Avatar creator, Open World invites in December; ongoing Dailies and Metropolis burn effects
• Treasury policy: Potential DAO discussions/votes on leverage/derivatives restrictions for treasury assets
• Partnership posture: Continued dialogue with Peapods; partnership remains paused pending architectural risk resolution

Closing tone

• The team characterizes this as a painful but clarifying event that accelerated learning on protocol risk. With runway intact, real products shipping, growing user/on-chain metrics, and a highly supportive community, leadership aims to make this a 30-day “blip” and exit stronger, with tighter risk practices and renewed focus on shipping the Open World and broader economy.