Individuals have the option to place Interest-Bearing Assets into abracadabra.money, which can then be utilized as collateral for obtaining the stablecoin MIM crypto through borrowing.
What Is MIM Crypto?
Magic Internet Money (MIM crypto) is a stablecoin with a soft peg to the US dollar, and it is created through the minting process on the decentralized lending platform Abracadabra.money. This stablecoin is generated by using interest-bearing crypto assets as collateral within the Abracadabra platform. MIM, which maintains its value in relation to the US Dollar, can be exchanged for other stablecoins. Unlike conventional stablecoin and lending protocols, the liquidation procedure on Abracadabra distinguishes itself by assigning a unique liquidation pri ce to each collateralized debt position ( CDP). When this specific liquidation price is surpassed for a given CDP, a liquidator has the opportunity to acquire the position by settling any outstanding MIM.
How Does Magic Internet Money Work?
Magic Internet Money, affectionately known as MIM, serves as the stablecoin affiliated with the Abracadabra protocol and is underpinned by interest-bearing tokens (ibTKNs). The selection of 'ibTKNs' is purposeful, as these tokens accrue interest and exhibit a predi cted market- driven price increase over time, thereby augmenting profits. The volume of these tokens grows as users settle interest on segments they borrowed from the lending pool.
Prominent instances of such tokens encompass yvYFI, yvUSDC, yvUSDT, xSUSHI, and yvWETH. These tokens are subsequently employed as collateral and injected into the system, subsequently undergoing minting into MIM tokens. As time progresses, these tokens can p potentially become interconnected with diverse cryptocurrencies blockchains and subsequently be subject to trading.
Traditional yield farming conventions entail users depositing or staking assets like SUSHI or USDT into yield farms like Sushi or Yearn. In return, they obtain less liquid ibTKNs, such as xSUSHI and yUSDT, which function as "receipts" for the original deposit, used to retrieve the initial investments along with accumulated interest. To simplify, liquid tokens are traded for less liquid ibTKNs.
Conversely, with stablecoins like DAI, users deposit liquid assets such as USDC or Ethereum, resulting in the collateralization process and the generation of liquid stable tokens like DAI. In essence, liquid tokens are exchanged for other liquid tokens.
Abracadabra takes a distinct approach by merging these two techniques. Participants are permitted to deposit less liquid ibTKNs, such as xSUSHI and yUSDT, as collateral and are then able to mint a more liquid asset - the Magic Internet Money (MIM). This in innovation by Abracadabra introduces the prospect of unlocking dormant capital, transforming less liquid assets into more liquid forms.
This inventive strategy by Abracadabra introduces a novel utility for interest-bearing tokens, which had previously remained untapped and underutilized. Through Abracadabra, users are empowered to elevate their asset leverage to a new level with minimal risk, forging fresh possibilities and models.
Summary
Abracadabra functions as a lending pool tailored for interest-bearing tokens, offering users enhanced control over their collateral rates in contrast to traditional lending platforms. The process entails the initial storage of collateral on the Abracadabra platform, followed by the dis contribution of debt allocation and interest to the borrower. Subsequently, MIM crypto tokens are deposited into the users' wallets, providing them with the flexibility to utilize the tokens across various locations at their discretion.
