Abracadabra

Lending

Abracadabra.money is a protocol that allows users to mint MIM (Magic Internet Money) stablecoin by depositing yield-bearing assets as collateral.

Risk Rating
Watch Out
Protocol Code Quality
Protocol Maturity
Protocol Design
Summary
What we like
Abracadabra allows users to leverage on top of their yield-bearing assets through issuance of its overcollateralized MIM stablecoin.
What we like less
The team still has substantial control over the borrowing platform and has poor risk framework with its accumulation of bad debt (reflexivity with the SPELL governance token being used as collateral).
What it means for you
Abracadabra can be a great way to earn "stacked" yield by depositing your interest-earning assets since collateralization ratios generally improve over time. Your borrowed MIM can then be used within DeFi to generate additional yield and profits.
Information
Exploit/Hacks
One
Info
  • Website
  • Token: SPELL
  • Tags: Lending
Key Metrics
  • TVL: $111.2M (Rank #70)
  • TVL Ranking by Lending: #0
  • Blockchain: Ethereum, Arbitrum, Blast, Fantom, Kava, Binance, Avalanche, Optimism
  • Chain TVL
    • Ethereum: $67.92M
    • Arbitrum: $36.05M
    • Blast: $4.07M
    • Fantom: $1.7M
    • Kava: $616.01K
    • Others: $827.8K
Risk Assessment
Watch Out
Protocol Code Quality
  • Code reviewed by at least one experienced auditor; DeFiYield audited in October 2021
  • Anonymous team reduces transparency
  • One unmitigated protocol hack since launch
Protocol Maturity
  • Core protocol launched in 2021; maturity over one year minimizes technical risk as smart contracts are well battle-tested
  • Top 5% by total value locked reduces risk
  • Multisig wallet controls protocol upgrades
  • Multisig consists of less than 4 signers, which makes the protocol more susceptible to centralization risks
  • No timelock exists or no information documented, which mean a malicious actor could approve upgrades without any delay
  • At least one critical governance issue documented
  • Low voting power concentration reduces risk
Protocol Design
  • No death spiral concerns
  • Robust controls to mitigate oracle price manipulation
  • Isolated markets enable asset risks to be contained to each individual pool without impacting the entire protocol
  • Solid controls in place to prevent risky borrowing
  • Basic mechanisms in place to incentivize liquidations
  • No reserves or no stability module
  • Abracadabra utilizes code based on Maker and Sushi and has succesfully survived two market crashes in 2022, proving its resiliency
Things to know about Abracadabra

How Abracadabra works

Abracadabra is a decentralized borrowing protocol that allows borrowers to draw loans against interest-earning crypto assets like xSUSHI as collateral. Loans are paid out in MIM, an overcollateralized USD pegged stablecoin. The platform's lending features were built on top of Sushi's Kashi lending platform which enables isolated lending markets. Users are able to adjust their individual risk tolerance based on the collateral they choose to deposit.

How Abracadabra makes money

Abracadabra generates revenue from three sources: liquidation fee, borrow fee and interest payments. If the price of your deposited assets falls below your liquidation price, your position will be flagged for liquidation and will be sold at a discount to liquidators; 10% of all liquidation fees are hardcoded to be taken out and used to purchase the SPELL governance token, which are then added to the SPELL fee sharing pool. Every time a user borrows MIM from the platform, a 0.5% borrow fee is collected and distributed to the SPELL fee sharing pool. A portion of borrower interest payment, which reflects how much your debt will increase each year, also gets added to the fee sharing pool.

How you make money on Abracadabra

You can deposit crypto assets into the Abracadabra vaults to mint MIM to be used across DeFi for lending and market making. SPELL token holders may also stake their assets on the platform to earn a portion of protocol generated revenue. Abracadabra currently supports two staking methods: sSPELL and mSPELL. The sSPELL pool pays out protocol revenue in additional SPELL, while the mSPELL pool pays out revenue in the MIM stablecoin.