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?
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?
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.
— ZachXBT (@zachxbt)
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.