I was only half concerned that SHIB would take the top spot for the week. Thankfully, gaming is still in focus with The Sandbox and Decentraland (both covered in our top play2earn games article) gaining over 250% this week. Loopring has also been a big focus as news leaked of its possible partnership with Gamestop to build a new NFT platform. With over 50% of all wallets connected to blockchain gaming, there’s no denying this might just be the trojan horse we’ve been dreaming of. Changing the way games are not only developed but the corporate structures surrounding them as well. This week we’ll be discussing a not-so-new project that started to gain attention with some big price movements in October called Abracadabra.Money.
Introduction
Abracadabra.Money is a lending platform that uses interest-bearing tokens (ibTKNs) as collateral to borrow Abra’s USD pegged stablecoin Magic Internet Money (MIM), which can be used just like any other traditional stablecoin. As with most stablecoins, it will eventually be traded on markets with other stablecoins like USDT, DAI, and USDC. Abracadabra uses Kashi Lending Technology to provide isolated lending markets, that allow users to adjust their risk tolerance according to the collateral they decide to use. On Abracadabra, users can borrow, lend, farm, stake, and swap tokens between MIM and the project’s native staking token SPELL. One of the other features available using Kashi is a lending engine that allows users to leverage their interest-bearing tokens positions. Kashi allows withdrawing more MIMs than should be possible, as long as the collateral required is supplied to the position eventually, within the same transaction. But every position you open on Abracadabra using the same collateral will be combined into a single position, no matter if it is leveraged or not.
The amount of MIM depends on two factors for each collateral you decide to deposit. One is the Loan to Value ratio (LTV), and the other is the initial most MIM allocation to that collateral. The protocol fees are derived solely from interest on borrowed MIM. When a debt is paid in MIM, fees are collected and used to buy SPELL tokens. These tokens are then used to stake in Abracadabra to get sSPELL tokens, which may have several benefits in the future. These sSPELL tokens are then continuously compounding. When users unstake, they will receive all the originally deposited SPELL tokens pus extra SPELL earned from the fees collected from MIM repayments from all wizards proportional to your share of the stake pool. Unlike most protocols where all user’s collateral is at risk of a liquidation event, in Abracadabra, each Collateralized Debt Position (CDP) is isolated and only at risk of its own individual liquidation. So, if a user opens two CDPs with different ibTKNs they are able to borrow MIMs versus those ibTKNs individually and set their risk tolerance accordingly. So, if they believe a certain ibTKN has a higher chance of decreasing in value, they can choose to borrow less MIM versus that. There are still times when a user’s ibTKN value will decrease and be flagged for liquidation. In this event, 3rd party players (usually bots) can choose to repay all the MIM debt in exchange for the ibTKN collateral used for that specific CDP. Each market has its own liquidation fee, but in general ibTKNS with underlying…
Hi! My name is Lark Davis!
I’m a cryptocurrency investor with years of experience and I’ve been making consistent profits in the crypto space.
I’m passionate about helping others do the same, so I run multiple educational channels on crypto investing.
