Call for Brainstorming: Create a MIM-fueled stable payments EVM blockchain (the xMIM chain)

Current situation

abracadabra.money is a platform that lets users deposit collateral in the form of interest-bearing crypto assets in order to mint MIM, a stablecoin that attempts to maintain a value of US$1.00. It is currently available on Ethereum, Fantom, Avalanche, Binance Smart Chain & Arbitrum and will be deployed to Solana, Harmony and Polygon soon.

As it aspires to be a multi-chain solution bringing the decentralized stable coin MIM to the people, abracadabra is subject to the usual issues many multi-chain protocols are facing: (1) Bridging tokens across multiple chains is high maintenance & brings liquidity issues, (2) usually all key contracts need to be deployed on each chain, (3) in case of abracadabra, the protocol is dependent on external arbitrage bots to guarantee that MIM = $1 on all chains (with ETH currently being the key hub chain to stabilize peg), (4) dependency on other chains’ benevolence (excl. ETH, no chain offers a trustful, really decentralized environment).

A long-term solution like a MIM-fueled stable payments EVM blockchain would provide the abracadabra development team with an environment in which it can streamline processes, coordinate bridging more efficiently and in which the validators & delegators of the hub chain won’t act malevolent against the efforts of abracadabra (in contrast, they would actively profit from abracadabra’s success and the usage of MIM).

Characteristics of a possible MIM-fueled stable payments EVM blockchain (the xMIM chain)

The xMIM chain would be a stable payments EVM blockchain with two relevant tokens: xMIM (stable coin tied to MIM; 1xMIM = 1MIM) which is used for on-chain transaction payments (gas fees) and sSPELL, a token used to support the consensus (chain security), vote in governance proposals, and to receive shares of both the abracadabra protocol revenues and the on-chain transaction fees paid. To clarify: SPELL would remain an ERC20 token on Ethereum to trade, but instead of staking it in the current staking contract, the staking process would include bridging the SPELL to the xMIM chain where it is transformed to sSPELL with all the rights, obligations & advantages stated above.

As EVM blockchain, it would provide fast transaction times, low transaction fees and an easy environment to deploy already-existing projects on.

Benefits

  • Possibility for abracadabra development team to deploy core contracts once (on xMIM chain) and do the rest via bridging solutions, therefore increasing process efficiency

  • Creation of one single key MIM gateway, e.g. for CEXs but also for long-term relevant products (e.g. paying with MIM via credit cards, retail adoption in general)

  • Security of MIM ecosystem against other malevolent and/or unstable L1 solutions (i.e. if an existing L1 solution breaks down or gets hacked/exploited/51%-ed, abracadabra governance has more flexibility in deciding what to do with the MIM left on this other L1 solution)

  • For SPELL holders: Staking SPELL will both secure the network (secure on-chain payment layer), earn transaction fee rewards (on top of already gained protocol fees)

  • For SPELL holders: Ease governance rights as tx fees will be lower on xMIM chain than on ETH; also the governance mechanism can be automated more efficiently as most decisions won’t affect „non-xMIM chain“ contracts, but the contracts deployed on the hub chain

  • New use case for MIM: Currently, mostly ETH (and AVAX, FTM, BNB) is used to pay for the transactions of abracadabra protocols. By insourcing most transactions to the xMIM chain (and fueling it via MIM), the usage of MIM is increased

  • Creation of an ETH side chain with stable payments (MIM as gas fees) that might be useful for many other protocols in DeFi, GameFi & Metaverse that want to deploy on a chain with transparent / easy-to-calculate / reliable gas fees.

Challenges, limitations & open questions

  • Which consensus mechanism should be applied? — While the POSDAO consensus mechanism of the Gnosis chain seems to be satisfactory for the purpose of the xMIM chain, it might be reasonable to look further and explore other potential mechanisms that would fit abracadabra’s long-term purpose more. Maybe Andre Cronje (due to his experience with Fantom and his involvement with abracadabra through K3PR) could be consulted for this endeavor.

  • Which bridging solution should be used? — As highlighted above, the bridge must ensure interoperability with 8+ chains (quickly growing) & allow cross-chain contract communication. The selection of the bridge supplier & careful infrastructure set-up is vital to make the xMIM chain a success

  • How to ensure a high degree of decentralized from the start? How to incentivize validators? — It makes sense that delegation is executed through locking/staking SPELL on xMIM chain; and validators will be rewarded with the transaction fees on the xMIM chain. As transaction fees should be kept low, it is questionable whether being rewarded with txs fees is enough to incentivize validators. One possible solution could be to give validators a higher share of the protocol revenues of abracadabra.

  • Will the chain improve or worsen CEX adoption of MIM? — On the one side it would be very advantageous if all MIM transactions are funneled through one chain (at the moment it looks like this will be Ethereum which is, in the long run, too expensive & slow), on the other side CEX’s are usually very reluctant to integrate new chains into their deposits/withdrawals.

  • Which processes/liquidity pools/contracts could & should be deployed on the xMIM chain & which external partners would be required to participate? — I’m especially thinking about the MIM-3CRV pool here, currently deployed on Ethereum via Curve. It is one important pillar to stabilize peg. Deploying Curve on xMIM chain wouldn’t be enough to replicate this pillar; it would be important to bridge the assets over, too. Here I am thinking it would be extremely advantageous for all players to have the key liquidity pool on the xMIM chain and Curve users could use this pool from all other chains as well (i.e. if I deposit 3CRV on Curve ETH, the funds are bridged to the xMIM chain in the respective pool; and if a Curve user on Avalanche deposits 3CRV, also this is sent to the xMIM chain and put in the same pool, and so on). The xMIM chain as hub for several DeFi protocols, fueled by MIM (giving DeFi projects also an incentive to act as validators!)

  • Would this side chain only be applied to streamline abracadabra’s processes or should it evolve to a competitive L1 solution? – IMO it could be at least advantageous for Popsicle Finance & Wonderland as well.

  • How to fund the development? — SPELL emissions are currently decreased, and high amounts of SPELL will be burned soon. With the decrease of emissions, funds become available to pay for the development of the xMIM chain.

  • Is return on investment given?

  • Who should be leading / developing this project?

Next Steps

I wanted to share those ideas to discuss and find out whether this could be a suitable long-term solution or whether there are other solutions more adequate to help abracadabra maneuvering into a multi-chain world.

Thanks and best regards,

@alexandomega