Abracadabra.money (SPELL + MIM)

Basics

• Based in:
• Started in / Announced on: 5-5-2021
• Testnet release:
• Mainnet release:
• From their Gitbook (8-2021):

"Abracadabra.money is a lending platform that uses interest-bearing tokens (ibTKNs) as collateral to borrow a USD pegged stablecoin (Magic Internet Money - MIM), that can be used as any other traditional stablecoin."

Audits & Exploits

• Abracadabra offers an active program with a top bounty of $100K (13-10-2021).
• Scored 43% on DeFi Safety (13-10-2021):

"Abracadabra is unaudited. A changelog was provided to the DeFiSafety team, though this was not circulated to the public meaning we cannot factor this into the score."

• After the low score, Abra devs claimed that DeFi Safety had asked for money to get a higher score, something they did not provide proof for. DS did apologize for the tone of their tweet afterwards but denied they asked for payment.

Bugs/Exploits

• $6.5M exploit via rounding error (3-2-2024).
• Abracadabra Cauldron V4 patched a reentrancy vulnerability which could be used to steal users’ tokens (25-1-2023).
• On November 8, 2022 Abracadabra lost $110K in a price oracle manipulation attack.

Governance

Admin Keys

• From their Gitbook (10-11-2021):

The 6/10 multisign is composed of:

1. Poolpi (Yearn Finance)
2. Leo Cheng (Cream Finance)
3. Michael (Curve Finance)
4. Squirrel (Popsicle Finance and Abracadabra Money)
5. Danielesesta (Popsicle Finance, Abracadabra Money and Wonderland DAO)
6. 0xMerlin (Abracadabra Money)
7. Julien (Stakedao)
8. C2tp (Convex Finance)
9. Georgiy (Popsicle Finance and Abracadabra Money)
10. Sifu (WonderlandDAO)

• From DeFi Safety (13-10-2021):

A mention that the protocol's governance decisions are subject to team consideration means that the protocol is controlled by the anonymous team. Additional governance info can be found in the tokenomics section of their docs, as well as in this Medium article.

a) All contracts are clearly labelled as upgradeable (or not) -- 15% -- certain protocol parameters are clearly labelled as upgradeable through voting in this Medium article. However, the specific contracts are not explicitly mentioned.

b) The type of ownership is clearly indicated (OnlyOwner / MultiSig / Defined Roles) -- 30% -- admin ownership is implied. In addition, MultiSig info can be found at https://docs.abracadabra.money/tokens/tokenomics.

c) The capabilities for change in the contracts are described -- 10% -- This Medium article describes what parameters can be changed within the protocol, but doesn't touch upon the scope of these capabilities for change.

No pause control documentation was found."

DAO

• From their Gitbook (10-11-2021):

"The governance of abracadabra.money happens through a snapshot page that can be found here. Once a proposal is passed, the team will consider it and implement it!"

"Will consider it" is not very binding.

Treasury

• Is using the Olympus Pro Program with 50,000,000 SPELL (10-11-2021).

Token

Token Allocation

• From their Gitbook (10-11-2021):

"The total Supply of SPELL has been reduced from 420B SPELL to 210B SPELL by performing a unique token burn event. 210B SPELL was minted to the SPELL contract itself. The contract has no way of accessing these tokens which ultimately turns the Token Smart Contract into a Burn Address. This burn event has been publicly announced on Twitter by our main dev 0xm3rlin.

63% of the total supply will be used to incentivise particular LP pairs or other liquidity mining programs. Read more about the weekly allocation of SPELL incentives in the following section! A 10 Year halving model will be followed, which will cut in half the rewards distributed every year.

7% of the total supply has been distributed via an IDO, half on Uniswap v3 and half on Sushiswap.

30% of the total supply is allocated to the team members which is vested [50% first year, then until 4th year]"

Utility

• For SPELL it is staking, governance and revenue sharing. There are also buy backs.

• From Medium (7-12-2021):

"Protocol fees are auto-compounded, and they are accumulated from borrowing fees, 10% of liquidation fees for certain markets, and loan interest."

Stablecoin

• The Magic Internet Money token is a USD pegged stable coin that is backed by interest bearing tokens with the following contract address: 0x99D8a9C45b2ecA8864373A26D1459e3Dff1e17F3

Technology

• Whitepaper or docs can be found here.
• Code can be viewed here. "At 79 commits and 11 branches, this repository's history is just shy of spellbinding but is certainly well on the way to becoming as enchanting as DeFi expects." (13-10-2021).

Implementations

• Built on: Ethereum, Fantom, Arbitrum, Avalanche, BSC

How it works

• From Medium (7-12-2021):

"Abracadabra leverages Kashi tech from SushiSwap to provide isolated lending markets, thus allowing every collateral to function independently. Leverage is based on these factors: Loops and LTV.

Loan-to-Value is the amount of borrowing vs. collateral. Loops follow this route:

1. Number of times collateral received
2. Magical Internet Money is minted
3. Magical Internet Money is converted into tokens
4. The tokens are deposited into a vault that earns interest
5. Tokens are re-deposited into Abracadabra

However, the LTV+Loops combination is not 1:1 with leverage. The number of loops you run with your chosen LTV will determine your leverage. Depositors can even choose to borrow MIM without leverage and low-risk liquidations."

• From their Gitbook (10-11-2021):

"Since MIM is a USD pegged stable coin, it needs to remain pegged to the USD. The mechanics used rely on arbitrage, keeping it simple. This can happen in several ways.

1. Users that hold debt, in MIM, might notice that MIM is trading on some market below 1 USD and decide to buy some MIM at this discount to repay some of their debt. This purchase of MIM will have a price rising effect relative to their volume.
2. Users that hold components (valid collateral), might notice that MIM is trading on some market above 1 USD and decide to open a position and sell the MIM borrowed to put to use elsewhere. This transaction will have a price lowering effect relative to their volume.
3. Users that hold other cryptocurrencies, (stablecoins or not) might see MIM trading differently on two of the above mentioned markets and decide to buy MIM on one market where the price is below 1USD and sell on another where the price is either at 1USD or above. This can also happen in reverse.

In most cases, a lot of the Market to Market arbitrage is done by automated bots that constantly monitor pools for opportunities to capitalize on these price differences. This has the benefit of having price pegs being corrected quite rapidly. MIM tokens are minted by a Multisign, deposited in the Kashi Markets smart contracts, and then injected into circulation only after the user deposits the collaterals!"

Fees

• Has fees that go for 75% to stakers (5-5-2021):

"The protocol fees, at launch, derive solely from interest on borrowed MIM. As debt is paid in MIM, fees are collected. They are distributed as follows:

1. 75% are used to purchase SPELL tokens that go to sSPELL token holders.
2. 20% is allocated to the governance treasury that will be used to incentive MIM liquidity pools.
3. 5% is redirected to a multisig treasury that will be used when market conditions require intervention."

Staking

• From their Gitbook (8-2021):

"You can stake and lock your SPELL to get sSPELL using the Wizard Dashboard! Staking SPELL has a 24 hour time lock (Every time a user stakes SPELL token, he will not be able to withdraw for the next 24 hours). Firstly fees (interest, borrow fee and 10% of the liquidation fee for certain markets) are deposited in the SPELL fee pool in the form of SPELL tokens. When users single-side stake their SPELL tokens they receive sSPELL tokens. sSPELL tokens represent your share of the SPELL fee pool with a mechanism similar to the SUSHI/xSUSHI one.

10% of all liquidation fees are also hardcoded to be taken out and used to purchase SPELL tokens in certain markets. These SPELL tokens are also added to the SPELL fee pool.

Your sSPELL tokens are continuously compounding! When you unstake, you will receive all the originally deposited SPELL tokens plus any additional SPELL earned from the fees.

sSPELL will also allow wizards to take part in governance as soon as the governance portal will be live."

Validator Stats

• From Our Network (30-10-2021):

"There are now over 7K sSPELL holders vs. 10K SPELL holders with this ratio increasing - a higher proportion of SPELL holders are now staking. This has been driven by the higher protocol fees which totaled $1.7M over the past week (ETH only)."

Liquidity Mining

• Had a proposal to implement a 20% reduction across all farms (8-10-2021):

"Given the extraordinary adoption that MIM and SPELL are seeing, the listing on central exchanges and the liquidity depth of our DEXs pools across chains, we believe that there is no need for such a high emission schedule."

Their Other Projects

Degenbox

• From their blog (3-11-2021):

"With the release of our Degenbox, Abracadabra can now accept non-interest-bearing tokens and turn them into yield producing assets by deploying strategies through the Degenbox."

Their first strategy is UST-MIM leverage through Anchor:

"Users deposit UST tokens into the cauldron in order to either borrow MIM or leverage their position! Since this cauldron is built and connected to Degenbox, it will run an automatic yield-enhancing strategy with the UST deposited as collateral. Once the UST arrive on Terra, they are provided to Anchor Protocol. Anchor is a lending platform that pays interest on the deposited tokens. Approximately once per week, we will be sending part of the aUST on Ethereum back to Terra in order to be withdrawn from Anchor Protocol in exchange for the UST produced by the strategy. Once this happens, the UST tokens are sent back to Mainnet and distributed to users proportionally to the amount of collateral they have deposited in the cauldron."

Roadmap

• Can be found [Insert link here].

Usage

• From Our Network (30-10-2021):

"The MIM market has surpassed $2.3B and is on track to overtake Terra's UST. Total value locked in Abracadabra is at ATH ($4B) - a 4x increase over October - 23% of MakerDAO's TVL."

Pros and Cons

Pros

• Shows clear understanding of DeFi with its usage of multiple money legos and having influention multisig signers.

Cons

• Governance votes are clearly not binding.

Team, Funding and Partners

Team

• Full team can be found [here].
• Daniele Sesta; founder
• 0xm3rlin; main dev
• Shares the github with Wonderland.

Partners

• Partnered with Olympus (10-10-2021).
• Looking at the multisig (9-10-2021) it is clear that the project works together with Popsicle Finance. Plus it has ties with yEarn, CREAM, Curve, StakeDAO and Convex.
• Partnered with Anchor to bring synergies between MIM and UST (14-10-2021).

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