Crypto Token Spell Can This Crypto Work Magic
Rancakmedia.com – Can this Crypto Token Spell really work magic?. Like its currency equivalent, the crypto sector is focused on receiving returns on your investment.
What if we told you that there is a method to borrow tokens and earn interest on your collateral at the same time? Imagine you took out a bank loan for your property, but are paid rent for it every month.
Decentralized Finance (DeFi) takes the decentralized ideas of blockchain and applies them to finance. Building on its native protocol and token Spell Token Crypto.
What is Abracadabra?
The debut of DeFi 2.0 sadly witnessed a repeat of the inefficiencies present in its predecessors, with capital inefficiencies chief among them.
Abracadabra Money is a lending protocol that attempts to solve this problem by leveraging interest-bearing tokens such as yvWETH, yvUSDC and xSUSHI as collateral to borrow Magic Internet Money, sometimes known as MIM.
Like other stablecoins (e.g., DAI and Tether), MIM reflects the value of the dollar and maintains its value over time. Abracadabra Money eliminates the need for funds to be deposited in a bank account. There is a new approach to earning income passively, using leverage, with almost zero risk.
What is Spell Token Crypto
The Abracadabra protocol has two key tokens active in its ecosystem. The first is Spell Token Crypto, the platform's governance token, and the other is MIM (Magic Internet Money).
Among other perks, Spell Token Crypto's main purpose is lurking. Like most other tokens that use the Ethereum network, Spell Token Crypto can be staked for different rewards. Two of them are:
Governance: Since the Abracadabra protocol is truly decentralized, the number of Spell Tokens you hold will determine how much weight your opinion will have in modifying features such as liquidation fees, collateral, and total locked value (TVL) (TVL).
Passive Income: When Spell Tokens are staked, users get a share of trading fees from the platform. This fee is the interest that is mostly generated from users borrowing MIM.
75 percent of the fee goes to token holders; 20 percent goes to treasury governance, which benefits the liquidity pool; and the remaining 5 percent is held in a multisig treasury that helps limit risk when market conditions worsen.
How Abracadabra Works?
Abracadabra Money uses a different technique from other protocols to provide loan services to merchants. Called the “isolated loan market,” this technique was originally implemented with Kashi, SushiSwap's lending platform.
By using isolated loans, Abracadabra can effectively leverage the use of interest-bearing tokens and ultimately empower users to make Magic Internet Money.
There are several phases involved in this process:
- User has to deposit collateral (first USDT to yEarn, then yvUSDT collateral) in Abracadabra.
- Abracadabra distributes debt allocations, including interest, to borrowers.
- After that, MIM tokens are placed into the borrower's wallet with the borrower's specified leverage amount.
- Users take their MIM wherever they want. They can exchange it to USDT, withdraw it or repeat the deposit process in yEarn to earn yvUSDT and more MIM.
The problem now is, how do you get your collateral back? The answer is that when you settle your obligations with accrued interest, you will be allowed to withdraw your collateral.
