Rehypothecation is the mechanism of leveraging your interest bearing assets to do more work with your capital. Abracadabra.money has opened a new DApp that allows users to deposit yield bearing assets and mint a new stablecoin, MIM (Magic Internet Money). Original Medium post
Medium post about yield bearing vaults to mint stablecoins
Farmers can earn SPELL by opening a vault with either xSUSHI, yvUSDT, or yvYFI, minting MIM, and providing liquidity in the new Curve 3pool. This is a very similar mechanism to Alchemix’s alUSD Curve pool. It’s a low risk play to provide liquidity in a stablecoin pool.
I don’t see anything extremely unique or innovative about Abracadabra, as it’s piggy backing on ARCx’s idea about generating stablecoins from yield bearing tokens (rehypothecation), but since ARCx has pivoted towards the DeFi Passport, there’s room for MIM.
Risks:
Watch your collateralization ratio and price to avoid having your yield bearing token vault liquidated.
You can also buy SPELL and provide SPELL-ETH on Sushiswap for higher APY, but this is a pool 2 and you need to be prepared for sellers using this pool as exit liquidity.
There is very little documentation about this project outside Twitter
There are no official Discord or Telegram servers to get questions answered
There is no audit report