Magic Internet Money (MIM) is a decentralized, collateral-backed stablecoin soft-pegged to the U.S. Dollar. It operates as the core product of the Abracadabra.money decentralized finance (DeFi) lending platform. MIM is designed to allow users to unlock liquidity from their interest-bearing crypto assets without needing to sell them, and it is distinguished by its native multi-chain functionality. ^[1]

Overview

Magic Internet Money is generated when users borrow against their crypto holdings on the Abracadabra.money platform. A key innovation of the protocol is its acceptance of interest-bearing tokens (ibTKNs) as collateral. This mechanism allows a user's deposited capital to continue generating yield while it is simultaneously being used to secure a MIM loan. This process is intended to enhance capital efficiency for users engaging in advanced DeFi strategies like leveraging and yield farming. ^[1]

The project was co-founded by Daniele Sestagalli, a prominent figure in the DeFi space associated with a collective of projects known as "Frog Nation," and an enigmatic, pseudonymous co-founder known as "Squirrel." ^{[1] [2]} The MIM stablecoin is not confined to a single blockchain. Through a technology called "Beaming," which utilizes the LayerZero protocol, MIM can be transferred natively across multiple blockchain networks, creating a more fluid and interoperable asset. ^[3]

History and Development

The public emergence of Magic Internet Money and its parent platform, Abracadabra.money, can be traced to May 2021, when its official social media presence was established. ^[2] The project experienced a period of significant growth in the latter half of 2021. By October 31, 2021, the protocol reported reaching $4 billion in Total Value Locked (TVL). This was followed by another milestone just over a week later, on November 8, 2021, when the platform announced it had surpassed $5 billion in TVL. ^[2]

A key development during this growth phase was the launch of the "Degenbox" UST strategy on November 8, 2021. This feature was an advanced yield-maximization strategy that integrated with the Terra blockchain's Anchor Protocol, allowing users to leverage their TerraUSD (UST) positions. ^[2]

In early 2022, the project undertook measures related to its tokenomics and addressed ecosystem-wide controversies. On January 3, 2022, the team executed a scheduled burn of 5.25 billion SPELL tokens—the platform's governance token—as part of an initiative to reduce emissions and manage the total supply. ^[2] Later that month, on January 27, 2022, the Abracadabra team issued a public statement to distance its operations from a controversy involving the associated "Frog Nation" project, Wonderland.fi. The statement clarified that Abracadabra's smart contracts, treasury, and team were distinct and managed independently. ^[2]

The project has continued to expand its cross-chain capabilities. On May 6, 2025, the "OFT SPELL Beam" went live, enabling the transfer of the SPELL token between the Ethereum and Berachain networks using the LayerZero protocol. ^[2]

Technology and Mechanism

The Abracadabra.money platform is built on several key technological components that facilitate the creation and movement of MIM.

Minting Mechanism and Collateralization

MIM is minted, or borrowed, by users who deposit approved collateral into smart contracts on the Abracadabra platform known as "Cauldrons." The protocol's distinguishing feature is its focus on accepting interest-bearing tokens (ibTKNs) as collateral. These are tokens that represent a user's position in a yield-generating DeFi protocol. By accepting ibTKNs, Abracadabra allows the underlying collateral to continue appreciating in value from its original source while also securing the MIM loan. ^[1]

The platform also utilizes the Iron Bank protocol, which enhances its multi-chain collateralization capabilities, enabling the minting of MIM across various blockchain networks. The protocol sustains itself through a fee structure that includes interest accrued on borrowed MIM, a one-time borrowing fee charged at the time of minting, and a liquidation fee taken from a portion of the collateral when a user's position becomes undercollateralized. ^[1]

Cross-Chain Functionality: Beaming

"Beaming" is the official term for transferring MIM and its associated governance token, SPELL, between different blockchains. This functionality is central to MIM's identity as an omnichain asset. ^[3]

Underlying Technology

Beaming is powered by LayerZero Labs' Omnichain Fungible Token (OFT) standard. The OFT standard enables a token to exist natively on multiple chains without the traditional risks and complexities associated with token wrapping. Instead of locking tokens in a smart contract on a source chain and issuing a synthetic or "wrapped" version on the destination chain, the OFT mechanism works through a "burn-and-mint" process. When a user "beams" MIM from one chain to another, the tokens are burned on the source chain, and an equivalent number of new tokens are minted on the destination chain. This ensures a unified token supply across all integrated networks and allows MIM to be treated as a native asset in every ecosystem it inhabits. This approach is designed to provide a more secure and seamless user experience compared to traditional bridging solutions. ^{[3] [2]}

Fee Structure and Governance

Each Beaming transaction incurs a flat fee of $1.00, regardless of the amount of MIM being transferred. This fee is not paid in MIM itself but is collected in the native gas token of the source blockchain (e.g., ETH on Ethereum, AVAX on Avalanche). This design ensures the full amount of beamed MIM arrives at the destination. The revenue generated from these fees is directed to the Abracadabra DAO treasury to increase its profitability and extend the project's operational runway. The implementation of this fee structure was the result of a formal governance vote, Abracadabra Improvement Proposal (AIP) #26, titled "Implement a 1$ flat beaming fee on all networks." ^[3]

DeFi Strategies

Abracadabra.money was designed to facilitate complex DeFi strategies, most notably through automated leveraging and specialized yield-maximization tools.

Leverage Yielding

The platform offers a built-in function that allows users to automate a leveraging strategy. Within a single transaction, a user can borrow MIM against their deposited collateral, use that MIM to acquire more of the same collateral asset, and redeposit it into their position. This process increases the user's exposure to the underlying asset and amplifies the potential yield generated, albeit with increased liquidation risk. ^[1]

Degenbox

The "Degenbox" was a notable advanced strategy offered by Abracadabra designed to maximize yield on collateral. The mechanism worked by borrowing MIM against user assets while the platform algorithmically deployed the underlying collateral into other high-yield DeFi protocols. A prominent example was the UST Degenbox strategy launched in November 2021. Users could deposit TerraUSD (UST) as collateral, which Abracadabra would then deposit into Terra's Anchor Protocol to earn a high yield (quoted at 16% at launch). Users could then borrow MIM against their yielding UST position, creating a leveraged yield farming loop that became popular before the collapse of the Terra ecosystem. ^[2]

Ecosystem and Governance

The Abracadabra ecosystem is composed of its stablecoin (MIM), a governance token (SPELL), and a decentralized autonomous organization (DAO) that oversees the protocol.

Associated Tokens

• Magic Internet Money (MIM): The core product of the platform, a USD-pegged stablecoin used for borrowing, liquidity, and payments across multiple blockchains. Self-reported data from its CoinMarketCap profile indicated a circulating supply of approximately 103.82 million MIM, a total supply of 698.96 million MIM, and over 417,000 holders, though these figures are subject to change. ^[1]
• Spell Token (SPELL): The utility and governance token of the Abracadabra.money platform. SPELL token holders can participate in governance decisions and stake their tokens to receive a portion of the protocol's fee revenue. The project's team has actively managed its supply, executing a burn of 5.25 billion SPELL on January 3, 2022, to reduce the total supply to 196 billion. ^[2]

Abracadabra DAO

The Abracadabra DAO is the decentralized governance body responsible for managing the protocol. Decisions regarding fees, collateral types, risk parameters, and treasury management are made through formal proposals and community votes. The implementation of the $1.00 beaming fee via AIP #26 serves as a clear example of the DAO's role in shaping the economic and operational policies of the platform. Revenue from this fee directly benefits the DAO treasury, funding future development and operations. ^[3]

Use Cases and Applications

MIM's design as a collateralized, multi-chain stablecoin enables a variety of applications within the DeFi ecosystem.

• Unlocking Liquidity: The primary use case is allowing holders of yield-generating assets to gain access to liquid capital (in the form of MIM) without having to sell their underlying positions.
• Leveraged Trading and Farming: Users employ MIM to increase their exposure to certain crypto assets and amplify their returns from yield farming strategies.
• Liquidity Provision: MIM is a common asset in liquidity pools on various decentralized exchanges (DEXs), where liquidity providers can earn trading fees from swaps involving the stablecoin.
• Payments: As a stablecoin, MIM can be utilized for on-chain or cross-border payments with lower volatility risk compared to other cryptocurrencies and with greater efficiency than traditional financial systems.
• Interoperability: The "Beaming" feature positions MIM as a tool for transferring value seamlessly across different blockchain ecosystems, enhancing capital flow and market integration.

These use cases are supported by MIM's presence on multiple blockchains, including Ethereum and others where it is integrated. ^[1]

Future Developments

The integration of MIM as an Omnichain Fungible Token is presented by the project as a foundational step toward more advanced cross-chain DeFi functionalities. The underlying LayerZero technology is intended to unlock future capabilities that could further enhance capital efficiency across the entire blockchain ecosystem. Stated goals for future development include:

• Cross-Chain Borrowing: Enabling users to open a borrowing position on one blockchain (e.g., borrowing MIM on Arbitrum) by using collateral held on a completely different blockchain (e.g., a yield-bearing asset on Ethereum).
• Cross-Chain Liquidations: Developing a mechanism to seamlessly execute liquidations of debt positions across different networks, which would create a more unified and resilient risk management system for the protocol.

These potential features aim to leverage the OFT standard to create a truly chain-agnostic lending and borrowing platform. ^{[3] [2]}

Controversies and Challenges

The project has navigated several challenges and public controversies related to market stability, data integrity, and its association with other projects in the DeFi space.

Stability and Market Data Concerns

Like many collateralized stablecoins, the Abracadabra protocol has faced community scrutiny regarding the stability of MIM and the risk management of its collateral backing. ^[1]

Additionally, historical data from market tracking platforms has shown significant anomalies. For instance, CoinMarketCap lists an all-time high for MIM of $2.71 on July 22, 2023. Such a value represents a severe de-pegging event for a stablecoin intended to be worth $1.00 and could also indicate a data aggregation error. The same source lists an all-time low date of April 3, 2014, which predates the DeFi era and the launch of Abracadabra by many years. This discrepancy suggests that the historical data for MIM may have been conflated with an unrelated, older project that used a similar name or ticker. ^[1]

Association with Wonderland.fi

In January 2022, Abracadabra was impacted by a major controversy surrounding Wonderland.fi, a sister project within the "Frog Nation" ecosystem. It was publicly revealed that Wonderland's treasury manager was a co-founder of the defunct and controversial Canadian crypto exchange QuadrigaCX. The negative fallout from this revelation cast a shadow over all associated projects. In response, the Abracadabra team issued a public statement on January 27, 2022, to clarify the separation between the two projects. The team emphasized that its operations, technical infrastructure, and treasury were managed by different multi-signature wallets and were completely independent of Wonderland's, stating that the "only affiliation" was their shared association with Frog Nation. ^[2]

Exposure to Terra-LUNA Collapse

The protocol's Degenbox strategy created direct and significant exposure to the Terra ecosystem. The strategy, which encouraged users to deposit UST to borrow MIM in a leveraged loop, tied a portion of the protocol's health to the stability of Terra's algorithmic stablecoin. The de-pegging and subsequent collapse of both UST and LUNA in May 2022 directly impacted the Degenbox strategy, its users, and the overall risk profile of the Abracadabra protocol. ^[2]