Abracadabra's core product, the isolated lending market and leverage engine.

Abracadabra provides isolated lending markets that allow you to borrow against various forms of collateral. Our isolated markets are called Cauldrons and they are based on Kashi Technology.

Core Lending Concepts

It's important for users to understand a few key concepts to better use Abracadabra (and lending protocols in general). These concepts will appear throughout your use of the Abracadabra products.

Lexicon - Terminology
  • Collateral: The asset you deposit into the Cauldron to secures your MIM loan.

  • Borrow: "Simple" borrowing implies borrowing MIM and getting it in your wallet for you to use it however you like.

  • Leverage: Leveraging is a special type of borrow where the MIM isn't sent to your wallet but used to acquire more Collateral and depositing it back into the Cauldron.

  • LTV (Loan to Value): The current ratio between collateral value and borrowed value. It is often expressed as a percentage. Supplying 100 USD of Collateral and borrowing 50MIM gives you a LTV of 50%.

  • MCR (Maximum Collateral Ratio): The Maximum LTV allowed for this market before being liquidatable. If ETH has an MCR of 80%, you can borrow up to 80 MIM per 100 USD of ETH. This figure is market-specific, each collateral has a different MCR.

  • Mint Fee (or Borrow/Opening fee): This fee is charged once, when you open the position. It is a percentage of the total amount you borrowed and it is added to your debt. eg: if a Cauldron has an opening fee of 1%, when you borrow 1,000 MIM, your debt will initially be 1,010 MIM.

  • Interest Fee: This is the interest charged on the MIM you borrow, per year. eg: if a Cauldron has an Interest Fee of 5%, your debt will increase by 5% each year.

  • Liquidation Fee: Discount at which the liquidator will buy the Collateral in order to repay the debt of an insolvent position. More detailed information in the Liquidations section.

Borrow vs Leverage

Cauldrons allow users to borrow or leverage their positions (and inversely, repay or deleverage). While both actions share a lot of common steps, it is very important to understand the difference between the 2.

When you borrow, you receive MIM in your wallet to use however you like.

When you leverage, the MIM that is borrowed in instantly exchanged for more collateral, that is instantly deposited back into the cauldron. You do not receive MIM in your wallet.

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