Spell Token (SPELL) is a cryptocurrency that is associated with abracadabra.money, a lending platform that allows users to borrow a stablecoin called Magic Internet Money (MIM) using interest-bearing tokens (ibTKNs) as collateral. Spell Token is used for governance, staking, liquidity mining, and fee discounts on the platform. In this article, we will explain what Spell Token is, how it works, and what its potential is.
What is Spell Token?
Spell Token is the native token of abracadabra.money, a decentralized finance (DeFi) protocol that enables permissionless lending and borrowing of crypto assets. The protocol uses the Kashi Lending Technology developed by SushiSwap (SUSHI), which allows for isolated lending markets that can support any token pair with adjustable risk parameters.
Users can deposit collateral tokens, such as Yearn Finance (YFI), Curve DAO Token (CRV), or Convex Finance (CVX), and receive interest-bearing tokens (ibTKNs) in return. These ibTKNs represent the user’s share of the pool and accrue interest over time. Users can then use these ibTKNs as collateral to borrow a USD-pegged stablecoin called Magic Internet Money (MIM), which can be used for various purposes, such as trading, investing, or spending.
Spell Token is the reward token of the protocol, which is distributed to users who provide liquidity, stake their tokens, or use the platform. Spell Token holders can also participate in the governance of the protocol, such as proposing and voting on changes or upgrades. Additionally, Spell Token holders can enjoy fee discounts when borrowing MIM or redeeming their ibTKNs.
How does Spell Token work?
Spell Token works as an incentive and utility token for the abracadabra.money platform. Users can earn Spell Token by doing one or more of the following activities:
- Providing liquidity: Users can provide liquidity to one of the supported pools on abracadabra.money or SushiSwap and receive LP tokens in return. These LP tokens can then be staked on abracadabra.money to earn Spell Token rewards.
- Staking: Users can stake their Spell Token on abracadabra.money to receive sSpell Token, which is a synthetic version of Spell Token that has governance rights and other benefits. Users can also stake their sSpell Token on other platforms, such as Stake DAO (SDT) or Wonderland (TIME), to earn more rewards.
- Borrowing: Users can borrow MIM from abracadabra.money using their ibTKNs as collateral and pay a borrowing fee. A portion of this fee is used to buy back Spell Token from the market and distribute it to the borrowers as a reward.
- Redeeming: Users can redeem their ibTKNs for their underlying collateral tokens and pay a redemption fee. A portion of this fee is used to buy back Spell Token from the market and distribute it to the redeemers as a reward.
Spell Token has a total supply of 210 billion tokens, of which 120 billion are currently in circulation. The remaining 90 billion are allocated for future rewards and incentives. The emission rate of Spell Token is determined by the governance process and can be adjusted according to the needs of the platform.
What is the potential of Spell Token?
Spell Token has a lot of potential as a reward token for a lending platform that supports various interest-bearing tokens and stablecoins. Some of the factors that could drive the demand and value of Spell Token are:
- Innovation and adoption: abracadabra.money is one of the first platforms to use the Kashi Lending Technology, which enables isolated lending markets that can support any token pair with adjustable risk parameters. This allows users to leverage their interest-bearing tokens and access liquidity for any crypto asset they want. Moreover, abracadabra.money also offers yield farming opportunities, where users can stake their LP tokens or open leveraged farming positions using borrowed MIM. These features could attract more users and liquidity to the platform and increase the usage and utility of Spell Token.
- Diversity and opportunity: abracadabra.money supports a variety of interest-bearing tokens and stablecoins, which gives users more options and flexibility to choose their preferred collateral and borrowing asset. For example, users can deposit YFI, CRV, CVX, or other ibTKNs and borrow MIM, DAI, USDC, USDT, or other stablecoins. Users can also swap their ibTKNs or stablecoins on SushiSwap or Curve Finance (CRV) for better rates or arbitrage opportunities. These options could create more demand and value for Spell Token as a reward and governance token.
- Resilience and potential: abracadabra.money has proven to be resilient and adaptable in the face of various challenges and crises. For example, abracadabra.money has survived multiple hacks, exploits, forks, and market crashes in its history. abracadabra.money has also shown remarkable recoveries and growths after each setback. For example, Spell Token has increased from less than $0.0001 in August 2021 to more than $0.0004 in January 2022. Moreover, abracadabra.money has the potential to disrupt and transform various aspects of the DeFi lending and borrowing market, such as interest rates, liquidity, risk, and efficiency.
Conclusion
Spell Token is a reward token for a lending platform that uses interest-bearing tokens as collateral to borrow a stablecoin called Magic Internet Money. Spell Token is used for governance, staking, liquidity mining, and fee discounts on the platform. Spell Token has a lot of potential as a reward token for a lending platform that supports various interest-bearing tokens and stablecoins. Spell Token could benefit from the innovation, adoption, diversity, opportunity, resilience, and potential of the abracadabra.money platform.
