An Introduction to Spell Token & Magic Internet Money (MIM)
With the emergence of innovative technologies and ideas, the DeFi space is undoubtedly experiencing an overhaul. Accordingly, one of the popular names among the disruptors is the multi-chain lending platform Abracadabra, which provides its spellcasters with Spell Tokens to bewitch Magic Internet Money! Read on to understand the “magical” nuances of this spellbinding project.
First Off, What is Abracadabra?
Abracadabra is a fascinating Decentralised Finance (DeFi) platform. It allows its users, popularly called spellcasters, to use their interest-bearing tokens (ibTKNs) from other DeFi platforms as collateral to borrow its stable coin called “Magic Internet Money (MIM)”.
How Does Abracadabra Work?
Using Abracadabra Money is quite simple. You can just follow the below-mentioned steps and add more dimensions to your crypto trading journey –
- Create an Interest Bearing Token (ibTKN)
- Deposit it as collateral at Abracadabra Money
- Borrow Magic Internet Money against them
- Use borrowed MIM to conduct yield farming by creating more ibTKNs or other crypto trading activities.
What is Spell Token?
Spell Token, traded under the ticker sign SPELL, is an ECR20 token used to incentivise the platform’s users to promote liquidity on its markets. These spell tokens can be staked by their holders to earn a passive income in the form of a percentage of the trading fees charged to the platform’s users for borrowing MIM. Upon staking spell tokens, users immediately receive sSPELL tokens in a 1:1 ratio in their wallets.
Now, What is Spell Token?
Spell Tokens are native to Abracadabra. They provide governance rights in the magical space. Holders of Spell Tokens can vote on operational matters of the Abracadabra platform such as collateral options, fees charged, updates, proposals, etc., to improve Abracadabra’s value proposition and user experience. For instance, the total supply of Spell Tokens was halved from 420 billion to 210 billion as a result of a vote during a token generation event in May 2021.
It must be noted that staking SPELL for Spell token comes with a locking period of 24 hours, during which you cannot withdraw the tokens.
Distribution of Spell Tokens
Abracadabra Money has distributed the total supply of its Spell Tokens of 210 billion in the following manner:
| Percentage of Spell Tokens | Number of Spell Tokens | Purpose/Allocation |
| 63% | 132.3B SPELL | Promoting liquidity via global farming incentives |
| 30% | 63.0B SPELL | Rewarding team members under a 4-year vesting schedule of 50%, 25%, 12.5%, and 12.5% streaming |
| 7% | 14.7B SPELL | Distributed via Initial DEX Offering (IDO); 50% on Uniswap v3 and Sushiswap each |
What is Magic Internet Money?
Magic Internet Money (MIM) is Abracadabra’s stable coin conjured by casting spells on interest-bearing crypto assets like yvYFI, yvUSDC, yvUSDT, xSUSHI, etc. It is pegged to the US Dollar at par and can be traded in the markets for other stable coins such as USDT, USDC, DAI, and many others.
MIM is kept pegged to the US Dollar by attaching a price effect relative to its volume.
Why are MIMs Dubbed As Self-Financing Loans?
Well, this is because they do finance themselves. Confused? Let’s find out how. This is because the pledged collaterals are nothing but interest-bearing crypto assets. So, you are earning a yield on your collaterals, and you are also receiving stablecoins in the form of Magic Internet Money tokens which can be redeemed for USD or used for crypto trading in the DeFi space. They can, in fact, also be used for yield farming and thereby pump up the Average Percentage Yield (APY).
Take Away
Abracadabra Money was launched in May 2021. It has taken the DeFi space by storm in less than a year, with MIM being in the top 50 crypto assets by market capitalisation among over 2,000 cryptos in the world.
If you also wish to deal in Magic Internet Money, you can start trading on Zebpay. We keep your crypto safe with nearly 98% storage in cold wallets and robust internal controls. Interestingly, 2 out of every 3 Indian crypto investors have started their blockchain journey with us, so join us and become a part of India’s leading crypto revolution.
