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Last updated: Dec 19, 2023
Abracadabra is a cross-chain lending protocol built on Ethereum and supports multiple blockchains and Layer 2 solutions: BNB Smart Chain, Fantom, Avalanche, and Arbitrum. The project enables users to deposit interest-bearing tokens (ibTokens) as collateral to borrow USD-pegged stablecoin MIM,thus solving the problem of idle assets locked up in capital.
Abracadabra uses the Kashi Lending Technology developed by Sushi to provide isolated lending markets allowing adjustable risk tolerance that depends on the user’s collateral. Kashi allows anyone to create customized and gas-efficient markets for lending, borrowing, and collateralizing digital assets. The isolated market framework employed by the protocol differs from traditional DeFi markets, as in them high-risk assets introduce risk to the entire protocol, whereas in Kashi, each market is entirely separate containing the risk of assets within itself.
Abracadabra's swap feature is an integration of the curve.fi website, through which users can swap the MIM stablecoin for USDT, DAI, or USDC. There is also a MIM3POOL button that opens the curve.fi website’s MIM-3LP3CRV Metapool, where users can deposit stablecoins and get MIM-3LP3CRV interest-bearing tokens in exchange.
Abracadabra has a Multichain integration to bridge MIM tokens on different networks, currently, MIM lending is available on the Ethereum mainnet, Fantom Opera chain, BNB Smart Chain, Avalanche, and Arbitrum L2. Each network’s available collateral can be found in the Abracadabra documentation.
The key feature of the Abracadabra app is that its so-called “Spell book” allows users to provide their interest-bearing tokens as collateral to borrow the MIM stablecoin. IbTokens are issued to users when they supply funds to the lending pools on various platforms, such as Curve, Yearn, and Sushi.
Borrowed MIM tokens can be withdrawn or swapped to other tokens, for example to SUSHI via SushiSwap. Swapping MIM to SUSHI allows the creation of a “loop” by staking SUSHI onto SushiSwap farm to receive xSUSHI and borrow MIM again. The collateral can be withdrawn as soon as the debt is repaid.
There are various Abracadabra farming and staking opportunities. Users can stake LP tokens to receive the protocol’s token SPELL and then deposit SPELL to gain the governance token sSPELL.
The platform also offers analytics with TVL, total Abracadabra fees generated, loan size, and other details, as well as LTV ratio. The Abracadabra wallet support includes MetaMask and Torus among other wallets, as well as any crypto wallet supporting the WalletConnect Protocol. The current Abracadabra fees vary from cauldron to cauldron but include a 0.5% borrower fee and a 0.5% Interest fee.
Abracadabra uses a dual token model, with SPELL, a token primarily used for staking, and MIM (Magic Internet Money), a native stablecoin pegged to USD. Voting power is given to sSPELL holders, which is obtained through staking SPELL in Abracadabra, and SPELL/ETH Sushiswap LP tokens holders. Holders of sSPELL can also claim on fees generated by the protocol.
The maximum supply of SPELL is 210 billion, 7% of which was distributed through IDO (Initial DEX Offering), 30% will be allocated to the team members within four years, and 63% is distributed through liquidity mining — 18% to SushiSwap ETH-SPELL LP and 45% to MIM-3LP3CRV LP to promote transactions with SPELL and MIM.
Abracadabra is part of the so-called “Frog Nation” - a group of DeFi projects sharing team members aiming to decentralize the financial field. So far, the group consists of Wonderland, Abracadabra, and Popsicle Finance. The CEO of the group - Daniele Sestagalli founded the projects in it, including Abracadabra, and has since been at the center of more than one controversy surrounding team members of projects in the group.
At the end of January 2022, crypto analyst and self-proclaimed “Rug pull survivor turned 2D detective” @zachxbt posted scandalous screenshots on Twitter from a chat with Daniele Sestagalli, regarding 0xSifu - Wonderland’s pseudonymous treasury manager. The conversation revealed that the identity of Sifu was that of Michael Patryn - convicted financial criminal, co-founder of the infamously collapsed Canadian CEX QuadrigaCX whose another co-founder - Gerald Cotten vanished with $169 million of investors' funds. Michael Patryn changed his name from Omar Patryn in 2008, and in 2003 he changed from Omar Dhanani. It is under the name of Omar Patryn that the U.S federal prison database holds records of him spending 18 months in prison on identity theft charges in 2005. Following the revelation, 0xSifu resigned from Wonderland.
On the same day as zachxbt’s revelation, Italian investigative journalist Nicola Borzi posted a thread on Twitter that included screenshots of a discussion on a private Telegram channel of an exclusive club of mostly Italian crypto investors regarding the $25 million Popsicle Finance hack. What attracted Twitter's attention in the screenshots was that a member using the alias Merlin was introduced to the rest of the group as being Giancarlo Devasini. Giancarlo Devasini, the CFO of Bitfinex, another quite controversial project, involved in what was once the largest hack in crypto, has been known to use the pseudonym Merlin. Merlin is a pseudonym often encountered in Abracadabra Medium posts and technical documentation, furthermore one of the Abracadabra team members is named @0xM3rlin on Twitter. The Abracadabra team disproved those claims, stating they are based on “wild speculations” referencing a post that was later admitted to have been a joke.
There are no Abracadabra audits, as the Abracadabra team claims its smart contracts are forked from other projects’ audited open-source code.
The platform benefits from integrations with yield optimization platform Yearn.finance, cross-chain swap protocol Anyswap, and DEXs Curve Finance and SushiSwap.
In October 2021, Abracadabra announced a partnership with Terra, a decentralized and open-source public blockchain protocol for algorithmic stablecoins.
Abracadabra’s plans include automating liquidations, creating more utility for MIM, and expanding across the entire DeFi universe.
https://docs.abracadabra.money/
https://snapshot.org/#/abracadabrabymerlinthemagician.eth
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