Thread by @AustinBarack

1/n Fundamental Fridays. Starting something new here! Every week I will write about a project that has a unique fundamental and a potent growth story. This week it's @MIM_Spell $SPELL

2/n @MIM_Spell is a decentralized stablecoin project where users can collateralize yield generating / productive assets (eg. yvUSDT, yvcrvIB, xSUSHI, etc) and mint a stablecoin $MIM (Magic Internet Money).

3/n $SPELL is unique in that it has the widest selection of productive assets available as collateral types and lower rates than other borrow lends (because there is no lender capital required as $MIM is minted backed by collateral).

4/n Additionally, the focus is multi-chain, with @MIM_Spell live on Ethereum, Arbitrum, Fantom, and Avalanche. This brings in more users and makes $MIM more useful. If you can borrow against your assets on every chain with one product, that's better than having to use many.

5/n Understanding what DeFi users want has led to parabolic growth, with $SPELL TVL recently exceeding $1B. Moreover, the $MIM minted is collateralized against a diversified set of productive crypto assets, reducing concentration risk.

6/n So what is the right lens through which to evaluate fundamentals? TVL is useful, but primarily in order to calculate the revenue generated from that TVL. Since mid August, TVL has grown from ~$150MM to $1.1B.

7/n @MIM_Spell generates protocol earnings via two sources, interest on minted $MIM and liquidation fees. This capital is then used to buy $SPELL which is distributed to stakers. Borrow rates for $MIM are 0.5% - 5.5% (depending on collateral type), liquidation fees 3% - 12.5%

8/n TVL is highly correlated with protocol earnings and tells the right story, but the best fundamental metric to use is earnings. At current TVL levels, $SPELL earns $120K/day, $44MM annualized. With the market cap of staked SPELL at $112MM, this equates to a PE ratio of 2.5x

9/n With a PE ratio of 2.5x, $SPELL is among the most productive assets in crypto and an order of magnitude more productive than the S&P500 avg (forward PE ratio of 21.9x). And 2.5x does not even factor in the growth trajectory that $MIM is on.

10/n Fast growth to $1B in TVL is certainly eye popping, but to get the full story multiple metrics, for $SPELL both TVL and protocol earnings, work best when viewed together. The growth story and the fundamental story then become evident.

11/11 Hope you enjoyed my first edition of Fundamental Fridays!