Project Name: Abracadabra Money (abracadabra.money)
Number of OP tokens requested: 500,000 $OP
L2 Recipient Address: Abracadabra OP Multi-sig (0x4217AA01360846A849d2A89809d450D10248B513)
Relevant Usage Metrics:
- $350M+ TVL
- 8K+ outstanding CDP positions
- $195M of circulating MIM
- One of the highest yielding pools on Curve ($86M TVL) @ boosted yield of 22.5%
Optimism alignment (up to 200 word explanation):
Abracadabra is one of the leading decentralized lending platforms in DeFi. We provide loans in our collateral-backed stablecoin, Magic Internet Money (MIM), against a wide variety of collateral (e.g., LP tokens, ERC-20 tokens, Yearn vault tokens, etc.) to unlock maximum capital efficiency. We can help Optimism kickstart an active and robust DeFi ecosystem by introducing MIM to the chain and providing our battle-tested lending services.
It goes without saying that we are a team building for the long-term. We plan to build through the bear market and one of the technologies we are most excited about is L2 scaling. We are hopeful that Optimism will emerge as one of the leading solutions and we want to help make that dream a reality.
How will the OP tokens be distributed?
$OP incentives will be used to drive liquidity to our MIM-Stable pool (currently in discussion with Velodrome). Without deep liquidity, we cannot provide a low-slippage leverage platform. For this new stable pool, we are aiming for a 15%+ APY. At a $5M depth, that means annual yield will need to exceed ~$0.75M. We would like at least half of that to come from $OP tokens and the other half to come from a combination of $SPELL incentives and fees.
How will this distribution incentivize usage and liquidity on Optimism?
By producing a liquidity pool with a high APY, we can attract users to shift liquidity from other chains onto Optimism. Our stable-stable pool represents an attractive, low-risk opportunity to earn yield in the current environment and Optimism’s low gas fees dramatically lower the barrier to entry for users.
Why will the incentivized users and liquidity remain after incentives dry up?
With a robust DeFi ecosystem and consistent demand for leverage, we believe the Abracadabra product can be profitable and completely self-sustaining. We have a goal to get to zero $SPELL emissions (across all chains) and subsist entirely off of swap fees and operational fees (e.g., borrow interest).
Over what period of time will the tokens be distributed?
Ideally, the tokens will be distributed over the course of 12 months. However, we may need to revisit the timeline depending on the price fluctuations of the $OP token, $SPELL token, demand for leverage, etc.
Has your project previously received an OP token grant? If yes, what’s the status of these tokens?
No. This will be our first $OP token grant.
How much will your project match in co-incentives?
This will be discretionary and will depend largely on how far we are from our stated goal of 15% APY. We are prepared to deploy up to 7.5M ($7.5K) $SPELL tokens per week. As stated above, we are trying to be entirely sustainable and so we hope that $SPELL emissions can be dropped to zero whereby the pool is entirely sustained off of fees.
