What is Magic Internet Money (MIM)? Detailed review of the MIM . token

• What is Magic Internet Money (MIM)?
• How Abracadabra.money works
• MIM . price stabilization mechanism
• Where to buy, sell and store MIM Token?
• Instructions to borrow MIM on the Abracadabra.money platform
• Risks of Abracadabra.money and MIM
• summary

What is Magic Internet Money (MIM)?

Magic Internet Money (MIM) is an algorithmic stablecoin valued at around US$1 and issued by decentralized lending platform Abracadabra.money. Abracadabra.money allows users to mortgage digital assets in exchange for loans that are MIM. When returning the MIM, the platform burns the MIM from circulation and returns the assets to the user.

Users can use Abracadabra to mint MIM on many different platforms including Ethereum , BNB Chain, Arbitrum, Fantom, Avalanche , Polygon ...

How Abracadabra.money works

Abracadabra's mechanism of action is similar to other mortgage lending platforms such as MakerDAO, Aave, Synthetix, etc. DeFi lending protocols such as MakerDAO, Compound and Aave only accept cryptocurrencies such as BTC, ETH... instead of interest tokens as collateral. Interest tokens are generated by users when they stake their respective assets on yield farming platforms like Yearn.Finance, Curve or Sushi to receive interest. Some popular interest rate tokens can be mentioned as yvWETH, yvUSDC, yvYFI, xSUSHI… However, these tokens are not tradable on exchanges. 

Recognizing user demand and the potential of interest tokens, the Abracadabra development team built and developed a platform that allows users to use interest tokens as collateral and to borrow stablecoins. MIM. With interest tokens from stablecoins, after mortgaging users can borrow up to 90% of the value of their staked assets.

By doing this, Abracadabra has opened up the opportunity to release capital trapped in yield farming platforms to help investors optimize returns as well as turn illiquid assets into liquid.

MIM . price stabilization mechanism

To maintain the value of MIM always stable around 1 USD, Abracadabra used the basic elements and properties of the law of supply and demand:

• User is borrowing MIM and holding a debt of Abracadabra. If the MIM is trading on several markets below 1 USD. They buy MIM at this price to pay off part of their debt. In addition, ordinary investors can also buy MIM to expect profit. This process will have the effect of pushing up the price of MIM.
• The user is holding the collateral. If they see that the MIM price is trading on some markets greater than 1 USD, they can mint MIM and sell it for a profit. This action will have the effect of lowering the price of MIM.

Where to buy, sell and store MIM Token?

Abracadabra is currently supporting users on many different blockchain platforms to use its services. Users can buy, sell and trade MIM tokens on popular decentralized exchanges (DEXs) such as Uniswap, SushiSwap, SpiritSwap, Trader Joe, Pangolin...

MIM was originally issued under the ERC-20 standard but was later developed into a multi-chain token. Therefore, you can safely store MIM on many e-wallets such as MetaMask, SafePal, Math Wallet, Trust Wallet….

Instructions to borrow MIM on the Abracadabra.money platform

In this example, TraderH4 will guide you how to borrow MIM on Abracadabra with yvUSDT using Ethereum's network.

Step 1 : You access Abracadabra at https://abracadabra.money/ then connect to your MetaMask wallet.

Step 2 : You select the item “BORROW” on the menu bar to go to the MIM loan interface.

Step 3 : Click on “yvUSDT v2” to continue.

Step 4 : Enter the amount of AVAX you want to mortgage then enter the amount of MIM you want to borrow. Then press “ADD COLLATERAL AND BORROW” to continue.

Some information you need to keep in mind when applying for an MIM loan include:

• Liquidation price (liquidation price)
• Maximum collateral ratio: The MCR represents the maximum amount of debt that a user can borrow with the selected collateral. MCR ranges from 30% to 90% depending on the type of collateral. The higher the MCR, the easier the loan is to be liquidated
• Liquidation fee: This is the discount a liquidator receives when purchasing collateral flagged for liquidation.
• Borrow fee: This fee is added to your debt each time you take out an MIM loan.
• Interest: This is the annual percentage of interest you pay on your debt.

Step 5 : You confirm on MetaMask wallet to complete the transaction.

Risks of Abracadabra.money and MIM

As with all borrowing and lending platforms in decentralized finance (DeFi), asset liquidation can happen to anyone. When the value of the collateral falls below a specified point, usually when the collateral is insufficient to repay the loan, liquidation occurs. The liquidation limit is displayed as soon as the user opens debt positions on the Abracadabra.money platform. If a user uses interest tokens that represent volatile assets such as SUSHI, YFI or ETH, their loan position may drop below liquidation in the event of strong market movements. 

In addition, the risks of using Abracadabra.money are the same as with other DeFi applications. The project works through the use of smart contracts. Although smart contracts are arguably one of the most important components for decentralized applications, hackers can still exploit security vulnerabilities from smart contracts to attack funds. product

summary

Above is the basic information about Magic Internet Money (MIM) as well as instructions for borrowing MIM on Abracadabra. Abracadabra provides a completely new service to DeFi users by allowing illiquid interest rate assets such as xSUSHI, yvUSDT, etc. to be deposited as collateral and can create a liquid asset called MIM. With Abracadabra, users can now take their assets to the next level with minimal risk, creating new possibilities and models. However, with loan applications, users are always at risk of asset liquidation. Therefore, you should calculate and manage your capital properly to limit your risks and optimize your profits. 

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