I bought some more $SPELL at $.0054
Here’s why:
🧵
Here’s why:
🧵
I never really liked $TIME, I very intentionally never covered it.
Why? Fundamentally, $TIME performs a human-overseen operation (similar to a VC fund), but on crypto rails.
It requires trust, it’s never been democratic in its operation. It didn’t even start out as a DAO.
Why? Fundamentally, $TIME performs a human-overseen operation (similar to a VC fund), but on crypto rails.
It requires trust, it’s never been democratic in its operation. It didn’t even start out as a DAO.
And that’s where $TIME fell apart: they introduced a bad actor to this human-overseen operation and thus investors lost confidence.
But projects don’t always need humans.
Part of the beauty of crypto is that it’s immutable code: a protocol can exist on a network without intervention and simply facilitate peer to peer/peer to protocol transactions.
More human dependence leads to more breakdowns.
Part of the beauty of crypto is that it’s immutable code: a protocol can exist on a network without intervention and simply facilitate peer to peer/peer to protocol transactions.
More human dependence leads to more breakdowns.
Abracadabra Money ($SPELL) is very much a protocol.
It functions more or less on its own. While there are points of human failure:
• buybacks of the tokens from fee revenue
• Replenishments of $MIM to be borrowed from cauldrons
There’s nothing fundamental requiring humans.
It functions more or less on its own. While there are points of human failure:
• buybacks of the tokens from fee revenue
• Replenishments of $MIM to be borrowed from cauldrons
There’s nothing fundamental requiring humans.
People over the last few days have been claiming that $MIM will depeg.
But a $MIM depeg would require some kind of exploit or loss of funds.
$MIM is collateral backed. For every $1 of $MIM there is at least $1 of collateral locked up that can be liquidated.
But a $MIM depeg would require some kind of exploit or loss of funds.
$MIM is collateral backed. For every $1 of $MIM there is at least $1 of collateral locked up that can be liquidated.
The other concern is $UST, the Terra Luna stablecoin that people are also claiming will depeg.
I have a pretty strong understanding of both mechanisms, and I’m much more worried about $UST than $MIM.
Some say that a $MIM or $UST depeg would destroy the other one.
But they miss the point: Abra has worked in other liquidation events.
Some say that a $MIM or $UST depeg would destroy the other one.
But they miss the point: Abra has worked in other liquidation events.
If $UST falls off peg, then Abra automatically sells loan collateral and buys back $MIM.
It’s mechanical and automatic.
It’s mechanical and automatic.
There are some other risks:
• Sufficient availability of $MIM (a ‘bank run’ could mean it’s hard to get your hands on $MIM)
• Exit liquidity for $UST (if you can’t sell $UST, you can’t get your loan collateral back)
But both would wreck borrowers more than Abra itself.
• Sufficient availability of $MIM (a ‘bank run’ could mean it’s hard to get your hands on $MIM)
• Exit liquidity for $UST (if you can’t sell $UST, you can’t get your loan collateral back)
But both would wreck borrowers more than Abra itself.
And at the end of the day, Abra has:
• Product market fit: lots of people want self-repaying loans
• Low risk: the theory behind the mechanics are solid
• Profitability: Rare in crypto, Abra had its first week of higher revenue than emissions
• Product market fit: lots of people want self-repaying loans
• Low risk: the theory behind the mechanics are solid
• Profitability: Rare in crypto, Abra had its first week of higher revenue than emissions
So risk then comes back to the team, and that’s why it’s so cheap right now.
But if we’re relying on a protocol of immutable contracts that we can trust to work, the damage the team can do is minimal.
But if we’re relying on a protocol of immutable contracts that we can trust to work, the damage the team can do is minimal.
The way I see it: people don’t understand the risks; they think that $SPELL is over-reliant on the team.
Or they think that $MIM will depeg based off of instinct without understanding the mechanics.
Then they overweight that risk, making it cheaper than it should be.
Or they think that $MIM will depeg based off of instinct without understanding the mechanics.
Then they overweight that risk, making it cheaper than it should be.
Inefficient markets, going against consensus: that’s where we really make meaningful money.
And that’s why I just bought some $SPELL.
And that’s why I just bought some $SPELL.
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We’re not frogs, zealots, or maxis.
My team writes rational, logic and data backed reports about making money in crypto. Check it out:
CryptoPragmatist.com/sign-up/
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