RFC: Add an $APE Cauldron

RFC: Add an $APE Cauldron

TL;DR: Add a new market using $APE (in the form of $mAPE) as collateral.
Cauldrons parameters:

  • Interest: 10%
  • Borrow Fee: 0%
  • MCR: 60%
  • Liquidation Fee: 10%
  • 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 10% interest, the following cauldron would produce roughly 300k 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 (as soon as security checks will be finalised) and would be deployed on Degenbox.
Adding variable interest rate, upgradable oracles, and built-in strategy rebalance functions. As the cauldron would be accepting $mAPE as collateral, the price feed would still be able to use Chainlink oracles. APE/USD Chainlink can be found here.

This proposal will remain as an RFC for at least 3 days, before the community can move it to AIP! If you have any suggestions or feedback, please comment below!

3 Likes

This is an awesome idea!!! $APE and the BAYC NFTs have an awesome community too, definitely smart getting them interested in using abracadabra.money! :gorilla::man_mage::magic_wand:

1 Like

I love this small cauldrons with respectful and highly liquid tokens, not much to add Romes…. SNED IT

3 Likes

This info was posted on discord earlier. Crypto risk assessment disclosed some worry regarding multisig and structure of the protocol. Of note only 93 users of ape use apeusd. I have to ask how many participants you would expect to utilize abra.

I am reluctant to be excited about this opportunity, but it comes from lack of education of ape itself.

I’m happy to sign off on this proposal if team confirms it has taken the time to inspect the risks of APE multisig as minimal threat to MIM

3 Likes

I think it’s a good idea for a project that seems to be developing.

However, before introducing it, I think it is wise to wait for the upcoming release of APE tokens that may cause the price to dumper and therefore create liquidations of users of the platform.

1 Like

SEND IT👀

Jokes aside we can do some more risk assessment on it before moving it to aip imo

1 Like

Mmmm I see @CryptoPhil, would you mind elaborating more on it?

I know these APE are redirected towards emissions for staking, is there another big unlock that we should consider?

1 Like

From what I can tell APE coin is not associated with Ape Fi (ApeUSD) which was the source of multisig concerns in the curve community. Other than being a collateral for ApeUSD.

I do agree though that risk assessment should include more than liquidity conditions and at least touch on existential risk to the product / team in general.

1 Like

Overall I trust the team’s assessment of risk here and like the idea of introducing more small cauldrons in new markets.

1 Like

In 2023, 9% of the total supply of EPAs will be released, there will be 3.3%, on 17.03.2023.
This will represent 33 million tokens.

I think this should be taken into consideration

2 Likes

Amended the technology section specifying the cauldron will be using amended cauldron V4 technology, after the security checks!

1 Like