RFC: Add an $APE Cauldron
TL;DR: Add a new market using $APE (in the form of $magicAPE) as collateral.
Cauldrons parameters:
- Initial Interest: 18%
- Borrow Fee: 0%
- MCR: 70%
- Liquidation Fee: 7.5%
- Initial top up of 3m $MIMs, with the possibility of scaling up to 7m depending on volumes and liquidity.
Note: this market will accept $mAPE (MagicAPE) tokens as collateral. $mAPE is Abracadabra’s in-house $APE auto compounder, read more about mAPE below!
Introduction
With the upcoming launch of Potion, Abracadabra aims to tap into the NFT ecosystem and its users, and there is no better way to do so than starting by accepting one of the largest NFT ERC-20 tokens on the market: $APE.
$APE is Yuga Labs (the company behind BAYC) ecosystem token, and it will serve as a decentralized protocol layer for community-led initiatives that drive culture forward into the metaverse. ApeCoin is an ERC-20 governance and utility token used within the APE ecosystem to empower a decentralized community building at the forefront of web3.
Risk Assessment
Despite being a highly volatile token, $APE has been steadily sitting in the top 50 coins, currently having a market cap of above 1.7B. $APE tokens are listed on major exchanges, such as Coinbase, Binance, with a 24h volume of more than $400m.
Source: https://www.coingecko.com/en/coins/apecoin
There is also good on-chain liquidity, with a UniV3 pool APE/WETH 0.3% pool, currently at $5.42m in TVL.
Source: Uniswap Info
Such liquidity conditions, together with a conservative MCR (60%) and Liquidation Fee (10%), will allow for smooth liquidations both on-chain, using the Uniswap Pool, and off-chain, tapping into the extremely deep APE markets on CEXs.
Cauldron top ups start at 3m $MIM while monitoring risk metrics and backing of MIM.
These more exotics markets are possible thanks to the current health of the $MIM-3pool, which allows the protocol to venture into new markets, and tap into new user bases.
mAPE
MagicAPE is Abracadabra’s in-house auto compounder that will automatically auto compound $APE rewards coming from $APE staking back into the user’s position. Read more on $APE staking here.
Using mAPE as collateral will allow users to leverage up on their $APE yield, using Abracadabra’s leverage engine!
mAPE will be launched soon so stay tuned for more info on that!
Profitability
Assuming a 3m $MIM initial top up, and a 18% interest, the following cauldron would produce roughly 540k MIM in profits, over a one year time frame for the protocol and $SPELL holders.
Depending on APE liquidity, APE trading volume, and circulating MIM, the cauldron top ups can be ramped up over time.
Furthermore, having $APE listed on Abracadabra would tap into the large and active Bored Ape community, allowing the protocol to potentially gain new users from the NFT space!
Technology
The following cauldron would use amended V4 cauldron contracts and would be deployed on Degenbox.
Adding variable interest rate, upgradable oracles, and built-in strategy rebalance functions. As the cauldron would be accepting magicAPE as collateral, the price feed would still be able to use Chainlink oracles.
APE/USD Chainlink can be found here.
Voting
The voting for the following proposal will start at 16:00 CET of the 14/02/2023, and last 48 hours!
Vote here.
Results:
The proposal has passed.
