Welcome to a new series that delves into Abracadabra’s newly launched cauldrons. This ongoing series will provide a comprehensive analysis of the cauldron’s performance, including its parameters, profitability and future plans. The chronicles will also monitor the cauldrons over time and provide any updates on changes or developments.
The $CRV cauldron, which launched a little over a month ago, has already proven to be one of the most successful cauldrons for the protocol. With an 18% interest rate, this cauldron has generated over $126,340.55 in fees for the protocol in its first month of operation.
This impressive performance is a testament to both the strong borrow demand against CRV across DeFi as well as the effectiveness of the Abracadabra solution in satisfying that demand.
The $CRV cauldron, which launched a little over a month ago, had initially struggled to gain traction. However, after changes to the interest rate were made through the Abracadabra Improvement Proposal #13.1, allowing for selected users to receive reimbursement for their interest fee in exchange for veCRV votes towards increasing protocol liquidity, the cauldron saw a significant increase in usage.
The interest rate was adjusted from 18% to a minimum of 11% for selected users, and as a result, the full $10M of the cauldron was sold out in an instant. This shows the effectiveness of the community-driven decision making process and the ability of the protocol to adapt to changing market conditions.
Since then, the $CRV cauldron has continued to be wildly successful for the protocol. Just two weeks after selling out the initial $10M, the community issued a top-up request to add an additional $5M MIM to the cauldron.
This top-up was quickly utilized, showing the sustained demand for this asset. With the addition of this $5M, the total amount of MIM in the cauldron is now $15M and is earning the protocol 11% APY, thanks to the interest rate adjustments made through Abracadabra Improvement Proposal #13.1.
The $CRV cauldron is an amazing example of the magic that is created when coupling Abracadabra’s lending engine with large players who require liquidity against their treasuries / portfolios. Not only has this partnership generated significant fees for the protocol but it has also provided valuable insights into the borrowing demand across DeFi.
Based on our learnings, we are excited to try expanding this model to other DeFi bluechip tokens and need your help! If you know of teams or individuals who need to generate liquidity, please reach out or have them complete this form. We are, of course, happy to work with prospective counterparties to create customized cauldron parameters that work for both lenders and borrowers.
Our New Year’s Resolution for 2023 boils down to one word: sustainability. If we want DeFi to be around for the next cycle and the cycle after that, protocols need to be able to generate profits that come from customers paying for products and not just from the treasury issuing new tokens. We are extremely happy that we’re on the path to create more fees than weekly SPELL emissions, and with the community’s help, we can finally make this a reality.