Stablecoins and their use in decentralized finance (DeFi) have played a key role in the 2021 cryptocurrency bull market because they allow investors to participate in the ever-growing number of protocols that offer high yield staking pools and they ease the process of transacting without needing to use a centralized exchange.
One project that has seen a significant amount of adoption thanks to its focus on creating a truly decentralized ecosystem and asset-backed stablecoin is the Abracadabra.money DeFi protocol and its native SPELL token.
Data from Cointelegraph Markets Pro and TradingView shows that after hitting a low of $0.0114 on Oct. 15, the price of SPELL rallied 178.55% to establish a new record high at $0.035 on Nov. 1 as its 24-hour trading volume spiked to $109.82 million.
Three reasons why SPELL is attracting the attention of DeFi users are the growth of Magic Internet Money (MIM) as a fully decentralized, cross-chain capable stablecoin, numerous cross-chain integrations that have expanded the MIM and SPELL’s reach throughout the ecosystem and the token’s governance and tokenomics structure.
Decentralized stablecoin growth
One of the biggest factors attracting the attention of active DeFi users is Abracadabra’s native Magic Internet Money stablecoin, which is fully collateralized and minted by depositing interest-bearing assets on the DeFi protocol.
The growing popularity and adoption of MIM can be seen by the increasing total value locked on Abracadabra, which reached a record $4.15 billion on Nov. 1 according to data from Defi Llama.
There has also been steady growth in MIM’s circulating supply, which stands at $1.933 billion according to data from CoinMarketCap. The most recent expansion is in large part due to the expansion of assets that can be pledged as collateral to mint MIM, which now includes popular tokens such as Shiba Inu (SHIB), FTX Token (FTT), wrapped Olympus (OHM) and Fantom (FTM).
Cross-chain integrations extend SPELL’s reach
A second reason investors are taking a closer look at SPELL is its expanding ecosystem, which has recently added cross-chain support for multiple blockchain networks, including Fantom and the Binance Smart Chain (BSC).
BSC is the most recent addition to the Abracadabra ecosystem after the community voted to add support for the network in a vote that closed on Oct. 30.
A new governance proposal is out to decide whether we should deploy https://t.co/gHWEQJMoOc on #BSC!
The voting will last 2 days!
Make sure to cast you vote herehttps://t.co/9QhH8kAaz8 pic.twitter.com/V47hDgKhI6
— ♂️ (@MIM_Spell) October 27, 2021
Other blockchain protocols currently supported by Abracadabra include Ethereum, Arbitrum and Avalanche, and the platform also benefits from multiple cross-protocol partnerships, including integrations with Convex Finance, Yearn.finance, Curve Finance and SushiSwap.
Related: Magic Internet Money races past $1B, sets sights on MakerDao
Favorable tokenomics and a decreasing circulating supply
Another factor catching the eye of DeFi investors is the tokenomics structure of SPELL, which includes governance votes on emissions to control inflation.
The team behind SPELL regularly monitors the emission schedule across the various DeFi pools in its ecosystem to ensure that new tokens are being minted and utilized in the most beneficial way for the protocol and holders.
Due to increasing adoption and the uptick in price, a large number of tokens originally set to be minted are no longer needed, so the team has decided to decrease the emission schedule by 20% beginning on Nov. 1. This effectively removed 8.7 billion SPELL tokens from the current circulating supply.
♂️!@0xM3rlin casted the “Incendio” spell!
8.7B $SPELL have been burned!
Read more about the approved proposal https://t.co/6sunolqzSa https://t.co/uGKm2kfYtv
— ♂️ (@MIM_Spell) November 1, 2021
Going forward, the outlook for the project remains bullish, and the team also has plans to further integrate SPELL and MIM to the Fantom ecosystem and also offer new staking opportunities in Arbitrum and Avalanche.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.