• Tue. Jun 25th, 2024

Spell Token: What Is It And How Is It Related To Abracadabra Money?

Spell Token: What Is It And How Is It Related To Abracadabra Money?

Spell Token (SPELL) is a token that primarily governs Abracadabra.money, a platform that enables users to deposit collateral in the form of crypto assets that are interest-bearing like yvYFI, yvUSDT, yvUSDC, and xSUSHI to mint MIM. MIM is a stablecoin that tries to maintain the value of $1.00. Furthermore, SPELL can be staked to earn sSPELL that gives governance rights and other forms of rewards.

Looking at the Abracadabra protocol’s ecosystem, there are two active primary coins. The first is SPELL, which is regarded as the platform’s governance token while the second is MIM (Magic Internet Money). The key purpose of the Spell Token (SPELL) is staking.

AI Trading Robot

What Is A Spell Token?

Just like a majority of the other Ethereum-based tokens, SPELL can be staked to get a variety of rewards. Since the Abracadabra protocol is wholly decentralized, the quantity of Spell tokens that a person owns determines the level of influence they have on different features like collateral, liquidation costs, and total value locked (TVL).

The users that stake a Spell Token get a share of the platform’s trading fees as a continuous passive income. 75% of the price goes to the token holders while 20% is sent to the government treasury to assist liquidity pools. The remaining 5% is sent to a treasury to help in limiting risks whenever the market conditions wane.

Since the Abracadabra protocol is entirely decentralized, voting weights in most variables are determined by the number of Spell tokens that one holds (TVL).

Spell Token Overview

Is SPELL (Abracadabra) A Good Investment?

AI Trading Robot

For now, not many have managed to grasp the complexity of DeFi 1.0. However, the progress that is being made on it provides a great idea of what to expect from DeFi 2.0. Analysts believe that capital efficiency is one of the most important and notable features of DeFi 2.0 and Abracadabra Money appears to be thriving in this area.

Related: What Is DeFi 2.0 in 2022…and How Does It Work?

The general market’s reaction to Abracadabra Money will enable us to determine its importance in the long term. In just two months, Abracadabra Money’s TVL has surged by 354% from $1.07 billion to $4.86 billion. The impressive performance can be attributed to the platform’s efficient work methodology and the positive response that it has received from the investors.

Many analysts and experts believe that the real Bull Run for the Spell token is yet to begin. Notably, it will be quite easy to expand once the project shifts to multi-chain.

On its part, MIM is a decentralized stable currency. Today, there are barely any entirely decentralized stablecoins on the market; with UST (Terra) and DAI (MakerDAO) being the only ones known. Nonetheless, decentralized stablecoins are expected to be the spark for the next wave in the crypto market, based on a new agreement between UST and MIM. Over time, the centralized stablecoins (full-reserve stablecoins) like USDC and USDT have shown several legal flaws.

This has enabled the decentralized stablecoins like MIM to thrive and they are eventually expected to exceed centralized stablecoins. MIM is one of the stablecoins that may help in realizing this aim.

Importance Of Spell Token

Recently, the Spell Token has continuously surged towards the top of the crypto ladder. Currently, the coin has a market valuation of nearly $1.9 billion, which makes it the world’s 78th largest crypto. That is an outstanding result considering that the token was unknown a few months ago.

First, the Abracadabra network’s native coin is the Spell token. It is regarded as one of the world’s most quickly growing decentralized finance (DeFi) networks. Based on Defi Llama, the platform has a total value locked (TVL) of over $5.8 billion. This valuation places it as the sector’s 11th biggest platform.

Abracadabra is a DeFi platform that mostly specializes in lending and earning. People can deposit funds and afterward earn interest on the network that is powered by the Ethereum, Polygon, and Avalanche blockchains. Notably, lending is what generates interest.

Benefits And Shortcomings Of Spell Tokens

Abracadabra is grouped among the few systems that enable users to borrow tokens while simultaneously earning interest on their collateral. One can assess the risks that they are ready to accept to enhance the rewards using the isolated risk markets.

On the other hand, since the collateral value might plunge below the threshold where the debts are covered, the danger of liquidation on this platform is massive. Also, since the Abracadabra protocol is decentralized, smart contracts are utilized. In turn, these smart contracts are prone to errors and data breaches.

Spell Token Price

In the past week, the token lost 34.80% of its value, and its current price is 1.139305 trading for 80.79% below its all-time high of 5.93. As of March 20, 2022, there were 79,993,000,941.982 SPELL in circulation.

SPELL is generally an Ethereum token that regulates the Abracadabra platform that lets users deposit some collateral in the form of interest-bearing cryptos to mint MIM. One can stake SPELL to gain spell that provides governance rights and many other benefits.

The Spell token is believed to help in powering the Abracadabra platform. Holding SPELL tokens as collateral in the loan market or any other contracts recognized by Abracadabra or the SPELL/ETH Sushiswap LP tokens that are placed in the project farm provides the project with adequate voting power.

Spell Token (SPELL) Rising

Spell Token Value

Just like most of the other cryptos, the Spell currency has quite a long way to go before it retests its all-time high. It is still more than 30% from its all-time high and it will be quite challenging to close that deficit.

However, one has to ponder whether the Spell token will maintain its pace in case Ethereum and Bitcoin resume their upside momentums. Whenever the leading assets rise in value, it proves to be bad for the alternative assets and SPELL is not an exception. But, anything can happen at any time as has been the case in the crypto market in recent years.

SPELL is the secondary token that can be staked to gain spell to unlock governance rights and other benefits. The SPELL token is powered by the Ethereum network and the trading fee is provided by the Abracadabra platform. Notably, each transaction fee is allocated to spell holders at an impressive rate of 75%.

While that idea has lots of possibilities, it remains to be seen whether the Abracadabra initiative will eventually succeed. Notably, it is decentralized finance TVL’s 11th project that has a total value of around $6.1 billion.

Moreover, the liquidity increased by 22.55% in the past week, showing that users are convinced that this idea is worthy. Although the asset’s momentum is quite bullish, this success will not certainly result in an excellent SPELL value.

Spell Token Stock

SPELL has a total supply of 210 billion, with this 210 billion incinerated after token production. Here is how these tokens are distributed:

  • Initial DEX offering of 7% (14.7B SPELL)
  • Team allocation is 30% (63.0B SPELL tokens) (4-year vesting schedule)
  • Global agricultural incentives are worth 63% (132.3 billion SPELL coins)

SPELL is scheduled to follow a 10-year halving model where the prizes awarded yearly are cut by 50%. Half of the team tokens will get distributed in the first year, 25% in the second year, and 12.5% in the third and fourth years.

624 million Spell tokens are released every week. Notably, SPELL is used as a governance token, with the users owning voting power that is proportional to their ownership.

Spell Token Worth

Interestingly, Abracadabra’s isolated lending marketplaces have resulted in a growth of innovation in the decentralized finance (DeFi) lending space due to SushiSwap’s Kashi Lending Technology. The risk is not endured cumulatively in an isolated loan market.

The users may provide some liquidity for any given token, and in case the currency pair loses liquidity of the smart contracts fail at any given point, just that one pair and not the entire platform, is affected. In that context, Abracadabra may offer various pairings that are not supported by a majority of the other decentralized exchanges (DEXs).

Related: What Are Decentralized Exchanges (DEXs)?

Investors and users may leverage their interest-bearing tokens, which is a notable benefit of employing the technology. Notably, the users borrow against their holdings, and then borrow against the borrowed stablecoin. That scenario results in many loops and increased leverage. Furthermore, everything is executed in a single transaction, and the user needs to pay the gas cost once.

Spell Token (SPELL) can be farmed by investing in multiple pools. One can stake SPELL tokens and the staked tokens earn some of the platform fees which compounds automatically. The platform fees include borrowing fees, interest, and 10% of the liquidation charge for some of the markets.

Since Abracadabra is a multichain system, Spell token is accessible on Fantom (FTM), Ethereum (ETH), Arbitrum, and Avalanche (AVAX). Furthermore, there are several blockchains, and most of the decentralized application (dApp) developers go for it as the preferred platform.

The Ethereum blockchain is secured and authenticated by several nodes and the network is slowly migrating from a proof-of-work (PoW) consensus to a proof-of-stake (PoS). Avalanche uses a directed acyclic graph (DAG) protocol meaning that all nodes process and validate transactions, unlike PoS and PoW.

Fantom uses its patented consensus technique enabling increased capacity and 2-second transaction completion while also enhancing security. On its part, Arbitron is an Ethereum layer-2 scaling solution that leverages optimistic rollups to gain near-zero gas prices and quick transaction speeds.

Related: What Are Layer 2 Scaling Solutions?

Spell Tokens Price Prediction

SPELL is recognized as a superior alternative and the price of SPELL Token is expected to reach new highs due to the large community. The price swings are challenging to predict, mostly when the market is quite bearish and bullish than ever.

Spell Coin Price Prediction (Jan 2022)

The price of a Spell token in 2022 will be around $0.021 and can only reach $0.026 as a maximum price. Notably, the average price of the spell tokens is expected to reach $0.022 by the end of 2022. A huge price turnover is projected within the crypto market’s stipulated range. By the end of 2023, the token is expected to reach a maximum value of $0.036 with the lower limit being $0.032 in case the market maintains its bullish nature.

Analysts also project that the bullish trend will continue for the next 7 years to reach an average price of $0.30 by 2029. In case everything goes according to plan, the top price of Spell Token in 2029 might flirt with $0.35. After a long bull run, the market might crash, which is normal in the crypto market.

AI Trading Robot

Kevin Moore - E-Crypto News Editor

Kevin Moore - E-Crypto News Editor

Kevin Moore is the main author and editor for E-Crypto News.