Spell Token (SPELL) is the native token of Abracadabra Money, a DeFi lending platform. Abracadabra Money has revolutionized decentralized stablecoins and collateralization by enabling collateralized tokens to unlock liquidity in Defi. The illiquid collateral mints the Magic Internet Money Stable-coin that can be transferred or traded in the ecosystem.
People have always considered crypto to be a volatile asset that is illiquid. Traders and users cannot instantly change illiquid crypto into cash, making it difficult for people to invest further in crypto. They need to wait long before getting the results of their investments. So, the process of enabling collateralized tokens to unlock liquidity in DeFi is indeed revolutionary.
Knowing how to stake Spell token can only be as important as how the whole Abracadabra ecosystem works. So, let’s get ready to dig deeper into Abracadabra and the Spell token that fuels the ecosystem.
Today’s Spell Token price is $0.001551 with a 24-hour trading volume of $64,885,512. Spell Token is up 4.55% in the last 24 hours. The current CoinMarketCap ranking is #168, with a live market cap of $151,356,808. It has a circulating supply of 97,561,584,003 SPELL coins and a max. supply of 196,008,739,620 SPELL coins.
Also Read:
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- What’s Liquidity Got To Do With Your Crypto?
What is Abracadabra Money?
Abracadabra Money is a decentralized finance platform that makes interest-earning tokens liquid. Deposit collateral on the platform earns interest and can mint Magic Internet Money (MIM). Abracadabra utilizes Kashi Lending Technology pioneered by SushiSwap to provide isolated lending markets that allow users to adjust their risk tolerance according to the collateral they decide to use.
The project was developed and founded by Daniele Sesta, who is also responsible for Popsicle Finance (decentralized market maker) and Wonderland (OlympusDAO fork), both on the Avalanche chain. Alongside, 0xMerlin and Squirrel are the co-founders of Abracadabra, who control and regulate the platform and are members of the “frog nation” community.
Here’s an illustration of the Spell token functionality in the ecosystem
Before knowing how to stake Spell token, know how it works in the ecosystem. Here is a hypothetical example of a use case:
A user wants to earn interest on 5000 USDC or interest-bearing crypto assets.
- They deposit 5,000 USDC into a Yearn-USDC Vault, generating a hypothetical 4.5% annual yield (APY). After depositing USDC, the user receives yvUSDC, an immobile token (ibTKN) representing their initial investment plus accrued interest.
- The user deposits their yvUSDC tokens as collateral to take out a loan on the Abracadabra protocol. Users borrow from the pool/cauldron of Magic Internet money MIM on Abracadabra. Each pool integrates a preset interest rate, collateral ratio, and borrow fee.
- The pool for yvUSDC stipulates an interest cost of 0.8%, and users can borrow up to 90% of their collateral value.
- The user earns 4.5% on the USDC they deposited to Yearn, has taken out a loan on Abracadabra that costs 0.8% a year, and holds MIM tokens representing 90% of their USDC value. As a result, they have $4500 worth of liquid MIM and are still earning a net 3.7% APY (4.5%-0.8%) on their original deposit.
Logically speaking, the user could continue leveraging this position up to 10 times with the Abracadabra crypto lending engine. For example, through automation, the protocol will:
- Automatically trade the loaned MIM tokens for USDC;
- deposit the new USDC to the same Yearn Vault generating a 4.5% APY;
- use the minted yvUSDT illiquid tokens to borrow more MIM on Abracadabra; and
- repeat this process until the user achieves the desired interest.
As a result, a fully-leveraged $5,000 deposit could earn a yield on several thousand additional dollars, minus the loan interest costs. This example only refers to one collateral source, showing how complex leveraged yield farming can become when utilizing Abracadabra money. This financial flexibility adds new global farming incentives and provides the DeFi ecosystem with a more decentralized, stablecoin engineered for cross-chain compatibility.
What is Spell Token?
The Abracadabra decentralized finance (Defi) protocol consists of three tokens: Spell tokens, sSPELL tokens, and MIM tokens. You can earn up to 0.17% APY on your SPELL. Compare rates on Spell or learn how to stake SPELL using a wallet. SPELL can be earned through lending, staking, and yield farming.
Spell Tokens
Spell token is the native token for incentivizing users of the ecosystem. Spell has a total supply of 210M after an initial 50% burn from 420M tokens. 60% was set aside for global farming incentives, 30% team tokens vested over four years, and a 7% initial coin offering. Spell tokens incentives ensure deep liquidity in the ecosystem.
Spell tokens are available on Ethereum, Fantom Opera, Avalanche Network, and Arbitrum. 25% of Abracadabra’s revenue builds up the treasury, and 75% buys back Spell.
sSPELL Tokens
An sSPELL token is a staked Spell token used for free sharing and governance rights. You can stake your Spell using the Wizard dashboard to get sSPELL tokens with a 24-hour lock-up period.
sSPELL tokens represent the user’s share of the Spell fee pool that consists of:
- 10% liquidation fee coded to purchase Spell and add it to the fee pool
- loan fees
- Interest
The governance token is compounded such that you receive your redeemed tokens and interest as Spell.
Magic Internet Money (MIM) tokens
MIM token is a stablecoin pegged to the US Dollar and is backed by interest-bearing tokens. It is multichain and is available on Ethereum blockchain, Fantom Opera, Avalanche Network, and Binance Smart chain. Market-to-market arbitrage opportunities completed by automated bots maintain the peg.
What Makes Spell Token Unique?
Abracadabra’s isolated lending markets have sparked innovation in DeFi lending. Users provide liquidity for tokens, and if the currency loses its liquidity or Smart contract, only that pair is affected. The feature allows Abracadabra to offer various pairs not supported by most decentralized exchanges.
It is unique in that users can leverage their interest-bearing token positions. Users borrow against their positions and then again borrow against the borrowed stablecoin, creating several cycles and increasing their leverage. The cycle is automated to a single transaction with a one-off gas fee.
The Spell can be farmed by providing liquidity in one of the different Defi pools. SPELL can also be staked, and staked tokens accrue a share of the platform fees (borrowing fees, interest, and 10% of the liquidation fee for specific markets) with auto-compound.
How does Spell Token Staking work?
Staking Spell enables users to earn a share of the Abracadabra fee pool. The fee pool consists of 10% liquidation fees coded to purchase Spell and add it to the fee pool, borrowing fees, and interest.
Staked Spell represents the user’s share of the fee pool. Stakes have a lock-up period of 24 hours to earn interest; staking Spell provides compounded passive income.
Staking SPELL on the Spell platform earns you DeFi staking rewards. This method requires using a Web3 wallet on a blockchain like Ethereum, which is why we have put together a visual step-by-step explainer to help guide you through the process.
How to Stake Spell Token on the Abracadabra wallet?
The Abracadabra protocol supports two staking models:
- sSPELL
- mSpell
How to Stake Spell Token using the mSpell mechanism?
MSpell enables stakers to earn the MIM stablecoin from the platform revenue. MIM digital assets are distributed in proportion to the Spell staked.
Step 1 Connect Wallet
- Visit the Abracadabra platform.
- Click ‘Connect wallet’ at the top right of the screen
- Select your wallet and connect.
Step 2 Stake mSpell
- Visit the Abracadabra platform.
- Hover over the Stake tab at the top of the page and select ‘mSpell.’
- Select the chain.
- Enter the amount of Spell you want to Stake
- Click ‘Approve.’
- Confirm the transaction on your wallet.
Step 3 Claim Accrued Interest
- Click ‘Claim’ at the bottom right of the screen.
- Confirm the transaction on your wallet.
How to Stake Spell Token using sSPELL mechanism?
sSPELL is the governance token of the Abracadabra platform, staking Spell as sSPELL accrued sSPELL as interest than can later be claimed as Spell. The staking process is similar to that of mSpell.
Step 1 Connect Wallet
- Visit the Abracadabra platform.
- Click ‘Connect wallet’ at the top right of the screen
- Select your wallet and connect.
Step 2 Stake sSPELL
- Visit the Abracadabra platform.
- Hover over the Stake tab at the top of the page and select ‘sSPELL.’
- Select the chain.
- Enter the amount of Spell you want to Stake on the form.
- Click ‘Stake.’
- Confirm the transaction on your wallet.
Step 3 Claim Accrued Interest
- Click ‘Claim’ at the bottom right of the screen.
- Sign the transaction on your wallet.
How much can you earn by Staking Spell Token?
The yield earned from those borrowing the Magic Internet Money (MIM) stablecoin is used to reward SPELL stakers. That yield level will vary depending on the number of borrowers using the Abracadabra platform and the rate at which loans are repaid. 75% of all loan fees go towards rewarding stakers.
You can earn up to 20% APY interest on Abracadabra. The interest rate, however, changes depending on several factors. These include:
- The liquidation fee for the day
- Revenue from the lending platform and other services
- Staking share of the fee pool
The interest is prone to high slippage as a result of frequent redemptions and subscriptions to the staking service.
Staked Spell also provides arbitrage opportunities for investors since they earn interest and can be used as collateral for crypto loans.
Benefits of Staking Spell Token
- Anyone can participate in the staking Spell provided the total amount available for staking is not exceeded.
- The Spell Token rewards are compounded, so holders earn higher rewards.
- The Abracadabra platform offers many Defi Yield farming opportunities.
- The products offered to users provide additional flexibility to portfolio management with quick and efficient compounding without a lock-up period.
- Abracadabra stands out because it offers interest for loan collaterals for the Mim token.
- The crypto bridges allow users to leverage different blockchains for low gas fees, security, and strength.
- Automated compounding ensures maximum staking returns.
- The staking pools and staking rewards are actively updated from the mainnet.
- The short lock-up period provides flexibility when markets turn sour.
- Low maintenance fees on staking products
Risks of Staking Spell Token
- Staking Spell tokens on Abracadabra has its dangers, just as with all forms of investing. The first and most obvious hazard of staking any crypto is the token’s value dropping over time.
- Volatile crypto interest rates from slippage are another example of a specific danger.
- 24-hour lock-up period to earn interest.
- The Staking process on a decentralized platform is not beginner friendly; there is the risk of making mistakes.
- The platform operates on smart contracts, and the smart contracts have recently fallen prey to bad actors resulting in Defi platforms losing millions of investors’ money.
Should you stake Spell Token?
Yes. Spell tokens offer lots of arbitrage opportunities for crypto traders. Staked Spell tokens can be used as collateral for taking out loans. There is a risk of Spell dropping in value and high slippage of interest rates.
Consider in your investment decision the voting rights resulting in a role in governance. The more SPELL tokens you have, the more you will have priority in decisions. The users can also earn passive income through a percentage of trading fees. How much you can earn will depend on the market price of SPELL, which can be highly volatile.
Abracadabra’s total value locked will dwindle when liquidity providers find better rewards elsewhere. To solve this, Abracadabra money partnered with Olympus DAO to take control of its liquidity. Protocol-owned liquidities allow protocols like Abracadabra to focus on delivering better products without worrying about their liquidity seeping away.
Spell Token is planning to follow a ten-year halving model, which will reduce the rewards in half, distributed yearly. As a result, 50% of tokens are to be issued in the first year, 25% in the second, and 12.5% in the third and fourth years, respectively, and each week, 624 million spell tokens are supplied.
