DEFI GAINING ADOPTION WITH SEC OVERHANG
Decentralized stablecoins are gaining adoption with SEC overhang. Magic Internet Money @MIM_Spell has capitalized on the opportunity + the Defi 2.0 narrative with its stablecoin Magic Internet Money (MIM). A recent strategy with Terra's UST expands the protocol’s utility.
Here is on how magic works;
Abracadabra is a lending protocol where users deposit interest bearing tokens as collateral to borrow MIM. The interest earning collateral results in deeper liquidation protection and novel yield opportunities
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Apparently, Abracadabra leverages @SushiSwap Kashi tech to offer isolated lending markets. Isolated markets allow each collateral to function independently.
As a result, depositors can adjust their risk lvl for each collateral i.e. liquidation price. They can also adjust their leverage. Leverage is based on 2 factors: LTV & Loops
LTV - amount borrowing v collateral - Loops - # of times collateral received, MIM is minted, MIM is converted into token, token is deposited into interest earning vault, vault gives interest earning token, token re-deposited into Abra, the combination of LTV + Loops is not 1:1 with leverage. Leverage is based on how many loops you run with your selected LTV.
Ex. If you choose 90% LTV and 10X Loops, you will borrow at 6.7X leverage Consequently, Abracadabra subsidizes the amount via a flashloan. Of course, depositors can choose to simply borrow MIM with no leverage and low-risk liquidations.
The 2nd token in the Abracadabra family is SPELL.
The main function of SPELL is to stake it to earn sSPELL tokens. sSPELL tokens entitle owners to:
- Protocol fees
- Voting rights
The Protocol fees are accumulated from loan interest, borrowing fees, and 10% of liquidation fees for certain markets. The fees are auto-compounded, Voting rights are currently non-binding, Users stake for 24 hour periods.
