Spell Token powers Abracadabra.money — a DeFi lending protocol that lets users borrow MIM (Magic Internet Money) stablecoin using interest-bearing tokens as collateral. Instead of locking up idle ETH, users can deposit yield-bearing assets like yvUSDC, stETH, or LP tokens and borrow against them while continuing to earn yield. This "leveraged yield" approach was revolutionary when launched. Abracadabra uses "cauldrons" — isolated lending markets where each collateral type has independent risk parameters. This isolation prevents a collapse in one market from affecting others. The protocol operates across multiple chains including Ethereum, Arbitrum, and Avalanche.
Daniele Sestagalli launched Abracadabra in 2021 during DeFi Summer. The protocol gained rapid adoption for its innovative yield-bearing collateral model. The Wonderland scandal (connected to Daniele's Wonderland DAO) impacted Abracadabra's reputation despite the protocol operating independently. Abracadabra continued operating and adapted through the bear market.
Users deposit interest-bearing tokens into cauldrons and borrow MIM stablecoin against them. SPELL is the governance token; sSPELL stakers earn protocol fees. MIM maintains its peg through arbitrage and liquidation mechanisms. Each cauldron has independent liquidation thresholds, interest rates, and collateral limits.
SPELL has a large total supply with sSPELL staking providing governance power and fee revenue. Protocol fees from borrowing interest are distributed to sSPELL stakers.
Borrow while earning yield — capital efficient use of DeFi positions.
Risk isolation prevents cascading liquidations across markets.
Available on Ethereum, Arbitrum, Avalanche.
sSPELL earns real protocol fees from borrowing.
Wonderland scandal association impacted community trust.
Decentralized stablecoins face depegging risk during market stress.
Leveraged yield strategies carry liquidation risk.
Protocol TVL declined significantly from 2022 peaks.
Magic Internet Money is Abracadabra's stablecoin pegged to $1 USD. Users borrow MIM by depositing collateral into cauldrons. MIM can be traded on DEXs and used across DeFi.
The protocol has operated without major smart contract exploits, but DeFi lending carries inherent risks: liquidation, oracle failure, stablecoin depeg. The Wonderland controversy was organizational, not a protocol exploit.
Wonderland was a separate treasury management DAO also associated with Daniele Sestagalli. A controversy over a team member's background caused a crisis. Abracadabra operated independently but suffered reputational damage by association.
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Learn how to purchase: How to Buy Spell Token