The crypto market contains a massive number of different digital assets. This comprises both centralized and decentralized apps. This post is about SPELL Token from Abracadabra Money. This article is covering important questions like What is SPELL token and why did the SPELL crash. Let’s take a look at it in more detail.
Abracadabra Money: MIM Token and What is SPELL Token?
According to its website, Abracadabra Money is a lending platform. The fascinating thing about this platform is that it employs interest-bearing tokens (ibTKNs). The interest-bearing tokens are those that gather stakes and continually go up in price as users hold them. They represent a share in a lending pool that grows in volume as borrowers reimburse interest. These tokens contain yvWETH, yvUSDC, yvYFI, yvUSDT, xSUSHI,… as security to get MIM (Magic Internet Money). This MIM is a USD-pegged stablecoin and it functions just like other stablecoins.
Spell Token (SPELL) is a prize token linked with abracadabra.money. The Abracadabra Money is a lending platform that utilizes interest-bearing tokens (ibTKNs) as security to borrow a stablecoin dubbed Magic Internet Money (MIM). Abracadabra utilizes the Kashi Lending Technology used by SushiSwap (SUSHI) to deliver separated lending markets that permit users to revise their risk tolerance based on the collateral they choose to utilize.
Abracadabra also gives yield farming options, where users can bet their liquidity provider tokens to farm SPELL. This allows sufficient liquidity for specific cryptocurrency pairs, presently Ether (ETH)-Spell Token (SPELL) and Magic Internet Money (MIM)-LP 3pool Curve (3CRV). Similarly, users can also unlock applied farming assignments by utilizing borrowed MIM from their interest-bearing collateral. In fact, Abracadabra has 3 primary tokens. These are :
- SPELL: This is Abracadabra’s capital token that functions as the governance token.
- MIM (Magic Internet Money). This MIM token is the major factor to keep Abracadabra Money’s lending standard. It is a USD-pegged stablecoin.
- sSPELL: This token is obtained by staking SPELL tokens and used for fee-sharing and administration.
The maximum supply of SPELL is 210,000,000,000 SPELL coins. The issuance of the SPELL token is as follows:
- 63% tokens for Global Farming Incentives
- 30% tokens for the Team allocation
- 7% tokens for Initial DEX Offering
According to the website, the MIM is a USD-pegged stablecoin and it is backed by ibTKNs. MIM tokens are allocated by the multisig holders on Ethereum and they are enclosed in distribution.
How does it work?
As mentioned earlier, Abracadabra Money presents independent lending exchanges. This allows users to configure their collateral rate more efficiently as resisted to using customary lending exchanges. In this, first, all the collaterals are reserved on Abracadabra and then a deficit allotment along with the interest is assigned to the borrower. Next, the MIM tokens are accumulated in the borrower’s wallet. Ultimately, users can utilize their MIM anywhere they desire.
Why did the SPELL Token price drop?
SPELL/USD Weekly chart – GoCharting
At the time of writing this, the SPELL price is sitting at $0.0009791. There are various causes why the SPELL Token price declined by more than 90% from its all-time high. First, and in all righteousness, most DeFi tokens have witnessed their prices and rank drop in the past few months. For instance, the Curve DAO Token price has tumbled by more than 63% from its all-time high. Likewise, the Uniswap and AAVE prices have plunged by more than 70%.
The other causes why the price has dropped nattily are the Federal Reserve and the continuing crisis in Ukraine. The Fed is anticipated to raise rates numerous times this year and there are anxieties about how risky coins will respond. At the same time, the continuing situation in Ukraine has forced investors to safe-haven assets like the US dollar and gold.
Spell Token encountered a huge bear market in January 2022 due to a significant scandal around Frog Nation. DeFi platforms like Abracadabra, Wonderland, and Popsicle Finance all come under the Frog Nation of blockchain drives managed by developer Daniele Sestagalli.
1/ This needs to be shared @0xSifu is the Co-founder of QuadrigaCX, Michael Patryn. If you are unfamiliar that is the Canadian exchange that collapsed in 2019 after the founder Gerald Cotten disappeared with $169m
I have confirmed this with Daniele over messages. pic.twitter.com/qSfWNnQPhr
— ZachXBT (@zachxbt) January 27, 2022
In January, tokens connected to Frog Nation saw a sell-off. The reason behind this was, reports that the treasury manager of Wonderland was presumably Michael Patryn. This Michael Patryn is a former convict and co-founder of the deceitful and now extinct Canadian crypto exchange QuadrigaCX. More surprisingly, an account seemingly operated by Sestagalli subsequently tweeted that he was knowledgeable of Patryn’s past.
1/ Today allegations about our team member @0xSifu will circulate. I want everyone to know that I was aware of this and decided that the past of an individual doesn’t determine their future. I choose to value the time we spent together without knowing his past more than anything.
— Daniele never asks to DM (@danielesesta) January 27, 2022
After this, Ashwath Balakrishnan, VP of Research, stated the consequences of the scandal in a report for blockchain research company Delphi Digital. The VP of research mentioned that naturally, all of this didn’t go down pleasingly with the community and users started to lose faith in the project. MIM shortly split its peg but rebounded quite fast. On 28 January, almost $1.4bn of MIM switched hands over Curve, most of which appears to have been users trading into the Curve pool.
Wonderland’s community shortly voted to terminate Patryn as their treasury executive, but the harm was already accomplished and Wonderland’s TIME token at that time dropped by more than 50%. With Abracadabra’s SPELL token witnessing an identical drop, the platform clarified to comfort investors and its community.
The official post which has been removed now stated that 0xSifu was never, at any time, directly or indirectly managing the Abracadabra Treasury. It’s essential to mention that a day before the disclosures about its treasury manager’s history, a coalition between Wonderland and Abracadabra was also presented. But as the news disclosed, Wonderland is on the brink of closure.
1/
Wonderland experiment is coming to an end. It is clear from the vote that the community is divided. The core and heart of Wonderland is still the community. If we cannot find agreement on wether to continue or not, it means that we failed.— Daniele never asks to DM (@danielesesta) January 30, 2022
Despite the bulk of Wonderland’s community voting against the project shutting down, architect Sestagalli mentioned its stop. He tweeted that, Wonderland is coming to an end. It is evident from the vote that the community is separated.
Investor trust and community confidence within Frog Nation projects have declined heavily after the scandal. The sell-off in Abracadabra.Money’s SPELL token displays no signs of relief, with the Spell Token price dropped by more than 90% year-to-date.
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Source: https://cryptoticker.io/en/rise-and-fall-spell-token/