DeFi continues to evolve, and one of the most exciting developments in recent years is the emergence of DeFi 2.0—a new wave of protocols focused on enhancing capital efficiency and unlocking liquidity from previously idle assets. At the forefront of this movement is SPELL, the governance token of Abracadabra.money, a leading protocol that enables users to borrow stablecoins backed by yield-generating assets.
This guide will walk you through everything you need to know about SPELL, how it powers the Abracadabra ecosystem, and how you can use it for lending, borrowing, staking, and yield farming—all while maximizing your returns in a smart, efficient way.
What Is SPELL and Abracadabra.money?
Abracadabra.money is a decentralized lending protocol that allows users to mint a USD-pegged stablecoin called MIM (Magic Internet Money) by collateralizing interest-earning assets—also known as yield-bearing tokens. These include assets like xSUSHI, yvYFI, veCRV, and other staked or vault-reward tokens that generate passive income.
Unlike traditional DeFi lending platforms that accept only static assets (like ETH or WBTC), Abracadabra unlocks the hidden value in assets already earning yield. This innovation significantly improves capital efficiency and is a hallmark of what many call DeFi 2.0.
The platform’s governance token, SPELL, plays a central role in the ecosystem:
- Total supply: 210 billion
- Market cap: ~$1.6 billion (as of latest data)
- Community-driven launch with no institutional investors
This fair-launch model allowed early adopters and active participants to benefit directly, reinforcing decentralization and community ownership.
👉 Discover how to leverage yield-bearing assets for maximum returns
How Does Abracadabra Work? The Power of Yield-Bearing Collateral
Traditional stablecoin protocols require users to lock up non-yielding assets (e.g., ETH) to mint stablecoins. But Abracadabra flips this model: instead of locking up “dead” capital, you use assets already generating returns.
For example:
- Deposit xSUSHI (staked SUSHI) as collateral
- Mint MIM at a loan-to-value (LTV) ratio typically capped at 75%
- Continue earning trading fees from SushiSwap while using MIM for trading, liquidity provision, or further leverage
This dual-income mechanism—earning yield and accessing liquidity—is the core innovation behind SPELL-powered DeFi 2.0 strategies.
Supported Chains
Abracadabra operates across multiple blockchains for broader accessibility:
- Ethereum
- Fantom
- Binance Smart Chain (BSC)
- Avalanche
- Arbitrum
This multi-chain deployment ensures low fees and fast transactions depending on your preferred network.
Step-by-Step Guide: Using SPELL for Borrowing, Staking & Yield Farming
Let’s dive into how you can interact with the Abracadabra protocol.
1. Access the Platform
Visit the official website: abracadabra.money
In the top-right corner, select your desired blockchain network. Connect your wallet (e.g., MetaMask) to begin.
Once connected, your dashboard displays all active positions, collateral, debt, and rewards.
2. Farm: Earn Yield with Liquidity Pools
Navigate to the Farm section to earn rewards by providing liquidity.
Options include:
- Stake SPELL directly to earn platform fees
Provide LP tokens for pairs like:
- ETH-SPELL
- MIM-ETH
- MIM-3LP (a Curve pool combining MIM, DAI, USDC, USDT)
Current Yield Examples:
- Ethereum: ETH-SPELL LP yields around 80% APY
- Fantom: 3poolv2 offers approximately 20% APY
To participate:
- Go to SushiSwap (or another DEX) and create an ETH-SPELL liquidity pair
- Click Approve, then Stake on Abracadabra
- Unstake anytime via the interface
Rewards accrue in real time and can be claimed or reinvested.
3. Borrow: Mint MIM Against Your Assets
Head to the Borrow tab to start leveraging your yield-bearing collateral.
Process:
- Select a collateral pool (e.g., xSUSHI, yvWETH, etc.)
- Enter the amount of collateral you wish to deposit
Specify how much MIM you want to borrow
- Max LTV usually set at 75%
- Example: $100 worth of wFTM → borrow up to $75 in MIM
Leverage Mode (Advanced Users)
Click Change Leverage to amplify your position—up to 10x leverage via recursive borrowing.
While powerful, high leverage increases liquidation risk. Always monitor:
- Expected MIM Amount: Estimated MIM borrowed during leverage cycles
- Expected APY: Projected return on your initial collateral
- Expected Leverage: Actual multiplier based on LTV and loops
- Expected Liquidation Price: The price at which your position gets liquidated
⚠️ High leverage trades consume more gas due to multiple transaction steps.
👉 Learn how to safely apply leverage in DeFi without overexposure
4. Stake SPELL and Boost Earnings
Under the Stake tab, you can lock SPELL tokens to receive sSPELL, a receipt token representing your share of protocol fees.
Key details:
- sSPELL exchange rate increases as fees accumulate
- Each deposit comes with a 24-hour lockup period
- You cannot unstake within 24 hours of depositing
This encourages long-term commitment and aligns incentives between users and the protocol.
Additionally:
- MIM3POOL: Deposit stablecoins (MIM, DAI, USDC, USDT) into Curve’s 3pool via Abracadabra
- SWAP: Redirects to SushiSwap for easy SPELL/MIM trading
- BRIDGE: Cross-chain bridge supporting asset transfers between supported networks
Why SPELL Represents the Future of DeFi 2.0
SPELL isn’t just another governance token—it symbolizes a shift toward smarter, more efficient financial primitives.
Key Innovations:
- Capital Efficiency: Use assets that earn yield while being used as collateral
- Liquidity Unlocking: Free up value from locked positions without exiting them
- Recursive Leverage: Build leveraged positions seamlessly within one interface
- Multi-Chain Accessibility: Operate across major EVM-compatible chains
By building on established DeFi bluechips (like Curve, Yearn, SushiSwap), Abracadabra adds a second layer of utility—hence the nickname “DeFi 2.0.”
As DeFi 1.0 laid the foundation with lending, borrowing, and swapping, DeFi 2.0 focuses on composability, sustainability, and optimized user strategies.
Frequently Asked Questions (FAQ)
Q: What is the difference between MIM and other stablecoins like DAI or USDC?
A: MIM is an algorithmic stablecoin pegged 1:1 to the US dollar but minted exclusively through overcollateralization of yield-bearing assets. Unlike DAI, which uses non-yielding collateral primarily, MIM leverages assets already generating returns.
Q: Is using leverage on Abracadabra safe?
A: Leverage amplifies both gains and risks. While 10x leverage can boost returns, it also exposes you to higher liquidation risk if the collateral value drops. It's best suited for experienced users who actively manage their positions.
Q: Can I lose money staking SPELL?
A: Staking SPELL carries minimal risk since it's non-custodial—you always control your funds. However, SPELL’s market price can fluctuate, affecting the USD value of your stake.
Q: How often are rewards distributed in Farms?
A: Rewards accrue continuously and can be claimed at any time. There's no fixed distribution schedule; earnings update in real-time based on protocol activity.
Q: Does Abracadabra have insurance against hacks?
A: Like most DeFi protocols, Abracadabra does not offer built-in insurance. Users are encouraged to assess smart contract risks and consider third-party coverage options.
Q: Can I use SPELL on multiple chains simultaneously?
A: Yes! SPELL exists across Ethereum, Fantom, BSC, Avalanche, and Arbitrum. Use the BRIDGE feature to move tokens between chains based on where yields are highest.
Final Thoughts: Embracing DeFi 2.0 With SPELL
Abracadabra.money exemplifies the next evolution in decentralized finance—where every asset works harder. By enabling borrowing against yield-generating positions, it closes the loop between passive income and active capital deployment.
Whether you're staking SPELL for fee rewards, farming high-yield pools, or leveraging collateral for amplified exposure, the platform offers tools for both beginners and advanced users.
As DeFi matures, projects like SPELL will lead the charge in redefining how we think about ownership, liquidity, and financial freedom.
👉 Start exploring high-efficiency DeFi strategies today
Core Keywords: SPELL, Abracadabra.money, DeFi 2.0, yield-bearing assets, MIM stablecoin, borrowing against collateral, leverage in DeFi, decentralized lending