Abracadabra.Money is a decentralized stablecoin protocol built around the concept of yield-bearing collateral. It allows users to mint its stablecoin, MIM (Magic Internet Money), by depositing interest-earning assets as collateral. Deployed across multiple blockchains including Ethereum, Fantom, and BSC, the protocol is a key innovation in the DeFi 2.0 landscape, focusing on capital efficiency and liquidity for otherwise locked assets.
SPELL is the platform’s governance token. With a total supply of 210 billion tokens, it plays a central role in community-led protocol decisions. Unlike many other projects, SPELL was launched in a community-driven manner without formal venture backing. MIM, the protocol’s stablecoin, is soft-pegged to the US dollar and is always redeemable for 1 USD worth of value.
How Abracadabra.Money Works
The core innovation of Abracadabra is its use of yield-bearing assets—crypto assets that inherently generate returns—as collateral. Many DeFi platforms incentivize users to lock up tokens to receive rewards or fee-sharing income. Examples include:
- xSUSHI: Earned by staking SUSHI on Sushiswap.
- yvYFI: A yield-bearing vault token from Yearn Finance.
- veCRV: Received for locking CRV on Curve Finance.
These assets represent locked value and typically cannot be traded or used elsewhere. Abracadabra allows users to deposit them as collateral to mint MIM, thereby unlocking liquidity without sacrificing yield.
Using the Abracadabra.Money Platform
Getting Started
To begin using Abracadabra, navigate to the official website. The platform is deployed across several networks—Ethereum, Fantom, BSC, Avalanche, and Arbitrum—so ensure your wallet is connected to the desired chain.
The dashboard provides a comprehensive overview of your positions, collateral values, outstanding loans, and earned yields.
Farming and Yield Opportunities
The “Farm” section allows users to earn additional yields:
- Single-Asset Staking: Deposit SPELL tokens to earn a share of the platform’s fees.
- Liquidity Pool (LP) Staking: Supply liquidity to supported pairs (e.g., ETH-SPELL or MIM-ETH) and stake the resulting LP tokens to farm rewards.
For example, providing ETH-SPELL liquidity on Sushiswap and staking it on Abracadabra can yield significant APY, often exceeding 80% on Ethereum. Similarly, stablecoin LPs like MIM-3LP (a Curve Finance pool consisting of MIM, DAI, USDC, and USDT) offer more stable returns.
👉 Explore current yield opportunities
Borrowing MIM Against Collateral
The “Borrow” section is where users mint MIM using approved yield-bearing assets as collateral.
- Select a collateral type (e.g., xSUSHI or yvYFI).
- Specify the amount you wish to deposit.
- Choose the amount of MIM to mint. Each collateral type has a maximum loan-to-value (LTV) ratio—typically around 75%. This means you can borrow up to $75 MIM for every $100 in collateral value.
The platform also supports leveraged borrowing. By increasing the leverage multiplier (up to 10x), you can amplify your exposure to the underlying asset. However, this also increases liquidation risk. Leverage is achieved through recursive borrowing, which means transaction costs can be high due to multiple operations in a single transaction.
Key terms during borrowing:
- Expected MIM Amount: The approximate amount of MIM to be borrowed.
- Expected APY: The annual percentage yield based on the initial collateral.
- Expected Leverage: The actual leverage applied to the position.
- Expected Liquidation Price: The price at which your position would be liquidated.
Staking SPELL and Earning Fees
Staking SPELL tokens converts them into sSPELL, a rebasing token that accumulates a share of platform fees. The exchange rate between SPELL and sSPELL fluctuates based on protocol revenue.
Note that unstaking sSPELL involves a 24-hour cooldown period. Each new deposit resets this lock-up period.
Other platform features include:
- MIM3POOL: A stablecoin liquidity pool on Curve Finance.
- Swap: Direct access to decentralized exchanges like Sushiswap.
- Bridge: A cross-chain bridge for transferring assets between supported networks.
Frequently Asked Questions
What is a yield-bearing asset?
A yield-bearing asset is a cryptocurrency that generates returns simply by being held or staked. Examples include vault tokens from Yearn Finance (yvTokens), staked governance tokens like xSUSHI, or liquidity pool tokens that accrue fees.
How is MIM kept stable?
MIM is backed by over-collateralization using reputable yield-bearing assets. Users can always mint and redeem MIM for $1 worth of value, which helps maintain its peg through arbitrage.
What are the risks of borrowing with leverage?
Leveraged positions are more susceptible to liquidation if the collateral value decreases. Higher leverage means a smaller price move can trigger liquidation. Always monitor your liquidation price and manage risk accordingly.
Can I use MIM outside of Abracadabra?
Yes. MIM is a widely accepted stablecoin across many DeFi platforms. You can provide liquidity with it, use it as collateral elsewhere, trade it, or spend it in supported applications.
How are yields generated on deposited collateral?
Even when used as collateral, your assets continue to earn their native yield (e.g., SUSHI staking rewards or Curve trading fees). This yield helps offset borrowing costs or adds to your overall return.
Is Abracadabra.Money decentralized?
Yes. The protocol is governed by SPELL token holders who vote on proposals and parameter changes. There was no pre-mine or venture round—the project was launched fairly by the community.
Conclusion
Abracadabra.Money represents a significant evolution in DeFi by unlocking the latent value in yield-bearing assets. It enhances capital efficiency and provides much-needed liquidity for tokens that are otherwise locked in long-term staking contracts. As a foundational DeFi 2.0 project, it builds on earlier protocols like Curve, Yearn, and Sushiswap, creating new possibilities for composability and yield generation.
The future of decentralized finance will likely be defined by such innovative combinations, offering users more flexibility, higher yields, and better asset utility.