Understanding the magic of the Spell Token (SPELL)
Figuratively speaking, the blockchain can sometimes sound like a really magical place once you get to understand how efficiently cryptocurrency and decentralized finance (DeFi) works. And then there are platforms like abracadabra.money that have really embodied the “magical” intricacies of crypto to market their financial products.
To understand what the mystic-sounding Spell Token (SPELL) is for, we have to first discuss what abracadabra.money offers to its users.
Abracadabra is a crypto lending platform where you can deposit interest-bearing tokens (ibTKNs) from other protocols such as yVault tokens from Yearn Finance or SushiX from Sushi–or basically tokens with locked values that often can’t be utilized any further within their own platforms. Using these as collateral, users can mint a stablecoin called Magic Internet Money (MIM).
How is MIM “magical”? To put it simply, MIM is a stablecoin that is interoperable with multiple chains including Ethereum, BNB Chain, and Avalanche among others. This means that MIM can readily be exchanged for other stablecoins such as Tether (USDT), USD Coin (USDC) or Dai (DAI) which users can then further put to use in other DeFi applications to earn more revenue than they would otherwise not have if they just held on to their ibTKNs.
If a user wants to withdraw their initial deposits, then users can convert their stablecoins back into MIM, which they will then use to redeem their collateralized ibTKNs.
In principle, MIM functions in the same way as wrapped tokens, like Wrapped Bitcoin (WBTC) or Wrapped Ethereum (WETH) which can extend the utility of the tokens they represent. The only difference being that MIM was especially designed to represent interest bearing tokens so they can be used further outside of their native platforms–like “magic”.
So where does the Spell Token (SPELL) come into this?
SPELL is a reward token on abracadabra.money, given to users who provide liquidity to the platform. SPELL is also a governance token, which means that holders are able to vote on directives on how the lending platform should be run, such as the incentives for liquidity providers and the supply and burn rate for the tokens.
SPELL can also be staked within the abracadabra.money platform to earn another token sSPELL, to generate even more revenue.
As a governance token, the value of SPELL is correlated with the usage of abracadabra.money. Currently, the total locked value on the platform is at $332.7 million according to DappRadar as of July 2022.
SPELL has a circulating supply of 93.6 billion out of a total supply of 196 billion and a market capitalization of $100 million according to CoinMarketCap. SPELL initially had a total supply of 420 billion upon its launch after which was reduced by half to 210 billion in May of 2021. A further 5.25 billion was burned in January of 2022.
Ready to start with crypto?
Start your trading journey with PDAX.
DISCLAIMER: The statements in this article do not constitute financial advice. PDAX does not guarantee the technical and financial integrity of the digital asset and its ecosystem. Any and all trading involving the digital asset is subject to the user’s risk and discretion and must be done after adequate and in-depth research and analysis.
PDAX is a BSP-licensed exchange where you can trade Bitcoin, Ethereum, and other cryptocurrencies directly using PHP!
You might also like
Cryptocurrencies you can trade on PDAX
February 23, 2023
Aave (AAVE) – a decentralized market maker protocol
February 20, 2023
What you need to know about Axie Infinity Shards (AXS)
February 14, 2023
Smooth Love Potion (SLP)–play to earn in the Axie Infinity Metaverse
January 24, 2023