AIP #62 - Deploy MIMSwap and Abracadabra on Nibiru Chain

Governance Proposals General Proposals
1

Introduction

Nibiru [launched its mainnet] (Nibiru Chain Debuts Public Mainnet Along with Four Major Exchange Listings - Decrypt) with a CosmWasm execution layer on March 12, 2024, and plans to release [Nibiru EVM] (https://www.theblock.co/post/298436/nibiru-evm-to-transform-ethereum-capabilities-for-tomorrows-web3) in the coming year. Alongside their EVM launch will be a substantial campaign with a dedicated Abracadabra liquidity program to boost yields on MIM pools.

At the forefront of the Nibiru ecosystem lies DeFi structured products and real-world asset (RWA) applications with layered yield strategies. To enable this, the ecosystem requires a key leverage protocol to drive demand and a complementary stableswap DEX to supply ample liquidity. Abracadabra is well positioned to fill this role given the existence of both Abracadabraā€™s yield protocol and MIMSwap.

With user preferences shifting towards sustainable returns over inflationary incentives, using treasuries and private credit as the base in leverage strategies creates a sustainable, high-yield product.

Technical Tooling

  1. In early discussions with SAFE (prev. Gnosis) to work on a Nibiru deployment
  2. Utilizes Subquery for subgraph utilization
  3. LayerZero integration for easy cross chain bridging
  4. Nibiru Proprietary Oracle has functions and output identical to Redstone/Chainlink

Proposal Overview

Deploying MIMSwap with Abracadabra is a strong strategy to capture liquidity in a new RWA market, supported by the Nibiru Foundation and various ecosystem partners. Focus areas include liquidity for MIM and stable pairs (e.g., MIM/USDC, MIM/SyrupUSDC, and stNIBI/NIBI), with a priority on revenue generation and long-term capital accrual.

Popular DeFi yield strategies offer unsustainable, higher risk inflationary yield. A structured product that layers comparatively lower risk, ā€œrealā€ yield strategies (x.com) offer more sustainable and competitive growth.

However, these products are often hindered by pools with low-liquidity. Instead of relying on short-term incentives for temporary liquidity, Nibiru will emphasize foundation and partner-provided liquidity, tailored cauldron structures, and revenue-focused strategies for Abracadabra. This approach aims to drive long-term TVL, liquidity, and trading volume growth for Abracadabra and Nibiru.

Rationale

By dedicating significant team resources and capital towards creating innovative cauldron deployment strategies on Nibiru, the team believes it can attract stable, long-term deposits, generating substantial sustainable revenue for $SPELL holders.

  1. Foundation Provided Liquidity

With the Nibiru Foundation contributing more than $2M in initial liquidity into MIMSwap and cauldrons with support from their ecosystem partners, the need for Abracadabra to source and incentivize additional liquidity will be drastically reduced.

  1. User-Focused Strategies

By concentrating on strategies that generate sustainable yield, particularly around leveraged treasuries and private credit, the deployment on Nibiru can drive user growth. With strategy yields reaching ~36% on 5x leverage, even without incentives, users would be drawn to the platform.

  1. Revenue and Profit Generation

The Nibiru team has researched various strategies to ensure a profitable deployment for both Abracadabra and MIMSwap. By emphasizing long-term TVL and profitable cauldrons, the deployment will be capital-efficient and highly profitable for $SPELL holders.

  1. Structured Product Strategy

A cornerstone of the Nibiru Ecosystem strategy is building a suite of structured products centered on layered yield and composable assets. Abracadabra will be the key leverage protocol and MIMSwap will act as the main stableswap.

MIM Liquidity Provisioning and MIMswap Deployment

Nibiru will attract liquidity to the MIMSwap deployment through several strategies, including:

  1. Nibiru Treasury Deployment
  2. Direct LP and Vault Incentives with Abracadabra ($SPELL) + Nibiru ($NIBI)
  3. Inaugural StableSwap DEX on Nibiru

Examples are further illustrated below. All of the liquidity for MIM pairs will be provided and deposited into MIMSwap. Nibiru aims to achieve a liquidity pool of approximately $10 million, targeting a 1:3 ratio of MIM to SyrupUSDC through a mix of treasury deployment, LP incentives and secondary products like vaults.

Method 1: Nibiru Treasury Deployment:

Nibiru will provide $3.5M in TVL with $2.25M to MIMSwap and $1.25M to Abracadabra which would guarantee a base of liquidity and revenue for MIMSwap and Abracadabra respectively.

The two pairs will be:

  • $250K USDC from Nibiru

  • $2M syrupUSDC from Nibiru

The two cauldron deposits will be:

  • $1M syrupUSDC from Nibiru (leverage TBD)

  • $250K stNIBI from Nibiru (leverage TBD)

Method 2: Direct LP and Vault Incentives with Abracadabra ($SPELL) + Nibiru ($NIBI)

Nibiru, together with Abracadabra ($SPELL), will incentivize liquidity for pools through direct $NIBI rewards and liquidity vaults, drawing capital from across ecosystems to build deep, sustained liquidity on Nibiru and strengthen the broader Abracadabra ecosystem.

Method 3: Inaugural StableSwap on Nibiru

MIMSwap will serve as the first stableswap on Nibiru for its EVM launch, capturing all initial demand for stable pairs within the Nibiru ecosystem. Nibiru plans to integrate MIMSwap with projects seeking stable swaps for liquidity, positioning it as a key partner with co-marketing support and strategic benefits.

Proposed Abracadabra Cauldrons

A SyrupUSDC Cauldron would offer some of the highest stable yields in DeFi earning up to ~36% yield, generating at least $600,000 of revenue for Abracadabra at target scale.

A stNIBI Cauldron would complement the Nibiru ecosystem and would be the first place for leveraged stNIBI positions capitalizing on a large untapped user base with >80% yields and $200,000 in revenue.

Nibiru will also have a perps protocol (SAI) that will be launched in parallel which will allow for GLP equivalent positions that would be leveraged with Abra. With estimated yields of ~30% unleveraged, this would be another massive opportunity for the Abracadabra deployment.

Key Details

Initially, we propose launching the following cauldrons on Nibiru:

SyrupUSDC: (Private Credit backed stablecoin)

Parameters:

  • Current Yield: 12.00%
  • Minimum Collateralization Ratio (MCR): 80%
  • Interest Rate: 6%
  • Liquidation Fee: 7.5%
  • Levered Yields
    2.5x - 24.5% (47.3% with Incentives)
    5.0x - 43.0% (88.5% with Incentives)
    Pool Size + Abracadabra Revenue
  • Initial test phase 5,000,000 MIM ($300,000 Revenue)
    • $500,000 Nibiru Treasury Deployment
  • Target Scale 10,000,000 MIM ($600,000 Revenue)
    • $1,000,000 Nibiru Treasury Deployment

stNIBI: (Staked $NIBI token)

Parameters:

  • Current Yield: 35.9%
  • Minimum Collateralization Ratio (MCR): 80%
  • Interest Rate: 10%
  • Liquidation Fee: 7.5%
    Levered Yields
  • 61.8% at 2.0x leverage
  • 87.7% at 3.0x leverage
    Pool Size + Abracadabra Revenue
  • Initial test phase 500,000 MIM ($50,000 Revenue)
    • $50,000 Nibiru Treasury Deployment
  • Target Scale 2,500,000 MIM ($250,000 Revenue)
    • $250,000 Nibiru Treasury Deployment

Conclusion

In summary, the Nibiru ecosystem provides an ideal environment for MIMSwap and Abracadabra to capture liquidity and drive demand for cauldrons. This deployment would offer a capital-efficient opportunity with sustainable revenue generation and ecosystem support through the following key highlights:

1. Foundational Liquidity Contributions: Nibiru supplied liquidity support, along with contributions from ecosystem partners, reduces the need for Abracadabra to incentivize liquidity.
2. Long-Term Revenue Growth: By focusing on high-yield, long-term TVL generation, the Nibiru deployment prioritizes sustainable revenue and capital efficiency for Abracadabra.
3. Structured Product Ecosystem: With an ecosystem focused around structured products Abracadabra will be supported with strategies pushing innovation in DeFi for the long-term.
4. Inaugural Stableswap on Nibiru: Positioned as the first stableswap on Nibiruā€™s EVM, MIMSwap will capture early stablecoin demand and benefit from co-marketing as a key launch partner.

This alignment with Nibiruā€™s ecosystem and resources presents a compelling opportunity for MIMSwap and Abracadabra to thrive and sustainably grow into the future.

Voting

The following proposal is composed of multiple parts. We propose to submit to the DAO vote in multiple steps.

Step 1: MIMswap Deployment - The first proposal to be put to a DAO vote involves deploying MIMswap infrastructure on Nibiru and opening the MIM pathway for users to bridge. Once this is implemented and initial traction is gained, a follow-up proposal will be introduced to activate relative SPELL emissions.
Step 2: Cauldrons Deployment - The second proposal for DAO voting focuses on deploying the cauldron infrastructure, enabling native MIM minting on Nibiru. In this follow-up proposal, a detailed risk analysis of each collateral type, oracle and liquidation scenarios will be conducted independently, with appropriate MIM caps set accordingly.
Step 3: Potential Treasury funds Deployment - The third proposal to be voted on by the DAO suggests deploying a portion of Abracadabraā€™s treasury funds into MIMswap pools on Nibiru to capitalize on the yields generated by these pools.

Note: All of these proposals will follow the format AIP XX.1, AIP XX.2, etc etc.

5 Likes
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The integration seems straightforward. However, I would be cautious of the chainā€™s ability to maintain a sustainable liquidity once incentives taper off. That said, the direct revenue components for SPELL holders seem promising.

The project seems to be progressing well with notable integrations, including LayerZero, SAFE, Subquery, and others.

2 Likes
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The main reason weā€™re offering so much foundation provided liquidity is for this exact reason. Our abracadabra strategy is focused around native yield NOT incentives so our liquidity would be deposited into MIMSwap with or without incentives decreasing the need for an additional $SPELL emissions.

4 Likes
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i believe in what nibiru is building so this deployment will impact both the community and the whole ecosystem in whole utilizing, nibi fast and seamless facilities.

3 Likes
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This oneā€™s quite detailed, albeit a bit hard to follow because of how much is being discussed. From what Iā€™m seeing online, Nibiruā€™s got on-par or superior tech compared to chains like Monad and Sei, and the foundation wants to put a lot of skin in the game to LP and make Abracadabra profitable on Nibiru.

I see on their ecosystem page that thereā€™s a flagship perps app (called Sai) thatā€™s GMX-style in how the LP vaults and markets are structured, so the top up of LP and MIM early could scale up to bring revenue to SPELL holders depending on the Sai trading volume and liquidity.

The proposalā€™s a bit of a gamble since Nibiruā€™s an infant-stage L1, but it looks like a bet worth taking IMO. Seeing lots of upside, a long-term competitive EVM, and relatively light lift to get cauldrons and MIMSwap deployed

1 Like
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Overall in short the way i see it is, this partnership is a win-win for both Nibiru and Abracadabra. It will help both parties grow their businesses and provide better services to their users.

Key questions for me
Have the smart contracts for the MIMSwap deployment and Abracadabra cauldrons been independently audited by reputable security firms?

How will the price feeds for the cauldrons be sourced and validated?
What measures are in place to ensure the accuracy and reliability of these price feeds, especially during periods of high volatility?

What are the specific parameters and mechanisms for liquidating undercollateralized positions?

How will the liquidation process be automated and how will it be prevented from cascading liquidations?

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Nibiru looks to a newer chain, similar to that of Linea or Berachain. Thereā€™s a degree of risk in doing a novel chain, but it really seems like the Nibiru Foundation will be pulling the weight of their support into this proposal. Being a day 1 partner will have merit in being early to any upwards flywheel + have intangible social value in the scenario of future incentive refreshes or continued partnership discussions.

Few other positives:

  • Given the committed treasury sizes, Abra might have the opportunity to be in the focal point within this new ecosystem.
  • In this current bull market, the meta will naturally move on to alt L1s

Things to consider:

  • How long would this deployment take? Would it be possible to make the integration occur prior to the closing of this current bull market?
  • There is a window of opportunity here that seems like act fast, but at the same time, thereā€™s not too many other deployment opportunities currently in governance
8

I am the founder of ERIS Protocol, a liquid staking provider in Cosmos which is also deployed on Nibiru.

Generally I support this proposal and can recommend Nibiru based on my experience from working with team. They are interested in growing the pie for everyone involved and this proposal follows this view, helping both Abracadabra, as well as Nibiru and ecosystem participants.

2 Likes
9

I can see some risks here - SC vulnerabilities, maintaining sufficient liquidity over timeā€¦ but everywhere are risks I guess :slight_smile: but with the Nibiru Foundationā€™s commitment of over $2 million in initial liquidity and plans for sustainable, high-yield strategies, this deployment promises to enhance long-term TVL, liquidity, and revenue for $SPELL holders - so also upsides!

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Wanted to make this as detailed as possible and while we think our technology is pretty great Monad and Sei are also incredibly impressive.

While we didnā€™t touch on SAI in the RFC that was one angle we have looked into heavily. SAIā€™s LP (SLPs) will act the same way as GMX and will give Nibiru users funding rate exposure to BTC/ETH/SOL/Etc. We see this as another Abracadabra cauldron which would drive even more revenue to $SPELL given their typically >20% APYs.

We understand the deployment risk and after numerous conversations with the Abracadabra team this proposal so the technical, liquidity and incentive lift would be minimal.

1 Like
11

Couldnā€™t agree more, we plan on pushing Abracadabra and MIMSwap hard to our community and the DeFi ecosystem broadly as we see this a truly innovative use case for sustainable high yields in all of crypto.

The MIMSwap deployment will be the easiest lift which will open the gates to an Abracadabra deployment once liquidity is deposited. On the technical deployment timeline, the Abracadabra team would have a better idea but we will provide as many technical resources as needed to make sure this goes smoothly.

1 Like
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One of the founders here. A team member linked this forum thread, so Iā€™ll add some replies with extra details.

Yes, Abracadabra and MIMSwap have had third-party audits. I Googled around a bit and found these:
Mar 2024 - Abracadabra and MIMSwap
Mar 2024 - Guardian Audits MimSwap Report
Apr 2022 - AbraNFT Contest

To start, Nibiru will have two main oracle providers on the EVM side: The Nibiru Oracle and Supra Oracles.

The Nibiru Oracle is a push oracle based on proof-of-stake for security. The validators of the blockchain network publish data in voting rounds, where data is aggregated using the voting power-weighted median. Validators with insufficient uptime (too few submissions) or with submissions that fall too far outside of the weighted median can be slashed and punished proportional to their stake in the network. This modelā€™s similar to how Terra powered its oracles for Luna, except the modelā€™s generalized to work for many digital assets.

Robustness: Thus far, the Nibiru Oracle has been running on mainnet for almost a full year without issue. It was audited externally by Zellic (direct PDF link) in 2023.

Data Sources: Price data is pulled from liquid exchanges and popular APIs based on the ā€œpricefeederā€ binary. As of now, this includes Binance, OKX, Bitfinex, Bybit, CoinGecko, CoinMarketCap, and Gate.io:
NibiruChain/pricefeeder惻GitHub: pricefeeder/feeder/priceprovider/sources
As long as the assets involved are either listed on CEXs with sufficient liquidity or present on CMC and CoinGecko, accuracy should be as robust as any other oracle.

Oracle Speed: In terms of speed, the only constraints are the block finality time of Nibiru and the parameter for how many blocks occur per voting round. The Nibiru blockchain has instant finality and has maintained an average block time of ~1.6 seconds since its genesis. Voting rounds are 30 rounds long (configurable via governance), so all price data is updated at least once per minute, but usually sooner.

Technical Compatibility: The Nibiru developers work closely with several of the teams building apps on top of Nibiru. Many communicated how important it was to have the Nibiru Oracle fit common interfaces on the EVM, such as ChainLinkā€™s AggregatorV3Interface.sol contract. Based on this, we added a Nibiru-specific precompiled contract, Oracle.sol, that opens the EVM up to query the Nibiru Oracle. Weā€™ve also made this precompile implement the ChainLink interface, so contracts will be able to use Nibiru in production without any source code changes. And we plan to support other interfaces based on builder demand.

Regard Supra: The Nibiru Foundationā€™s finalizing an agreement to get support for Supra Oracles that also fit the ChainLink interface deployed on Nibiru mainnet.

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Nibiru and Abracadabra aligning on sustainable yield strategies is a much-needed evolution for DeFi. Real-world assets will set a new standard for competitive growth.

Fully supporting this forward-thinking proposal.

2 Likes