Abracadabra Impact on Terra’s UST

Abracadabra Money is a lending platform that allows users to deposit interest bearing tokens like Yearn Finance debt tokens and stable coins like UST as collateral and borrow MIM stable coin. MIM token, Magic Internet Money token, is a USD pegged stable coin from Abracadabra and it can be used any other stablecoin. 

Abracadabra Money recently introduce its first leverage strategy for UST deposits, aptly named degenbox, that allows leveraging collaterals upto 10x to those who loves to live on the edge. With the Degenbox strategy users can deposit UST to Abracadabra to borrow MIM tokens and then convert MIM tokens to UST and deposit them back to Abracadabra in a loop. With a recursive loop deposits UST, borrow MIM, swap MIM for UST users will be able to leverage up to 10x and push their APY to insance 100% on stablecoin. If you are aware of InstaDapp leverage strategies, this sounds very familiar to you.

Let me repeat if you were not paying attention to the statement above – UST deposits to Abracadabra can earn upto 100% APY! That is insane in the age where most of stablecoins deposits elsewhere gives 8%-10% APYs.

On paper this sounds good, but how is it working in practice? You may ask! Abracadabra Degenbox strategy was announced on November 3rd and it’s been more than a month since its launch. Let’s look at what impact had on UST supply in the market.

The following chart shows UST supply before & after Abracadabra Degenbox strategy launch. As you notice in the charts, just after a week of launch the UST circulations went to the moon! You literally see a hockey stick style growth in the supply of UST.

The Degenbox strategy of Abracadabra uses Anchor protocol to provide up to 100% APY for UST depositors. 90% of the UST deposits in Degenbox are bridged to Terra and deposited into Anchor protocol for 20% returns. The strategy automatically withdraws the returns every week and bridges them back to Ethereum network to distribute to the depositors. All these is taken care by Degenbox in a transparent way and users does not need to worry about performing any transactions after depositing UST into Degenbox.

Now let us look at the Anchor UST deposits before and after Degenbox launch. The following chart shows the hockey stick growth in Anchor UST deposits since the launch of Degenbox.

The partnership of Terra & Abracadabra is setting UST ecosystem growth on fire! LUNA Is going to the moon.


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