How to cast a magic spell to your $OHM and (3,3) strategy using Abracadabra.money
The HON. Ohmies and potential-ohmies, it’s hard to sleep these days by exploring innovative & exciting products in DeFi, especially with OlympusDAO.
Lots of subjects to talk about Olympus, but can’t postpone delivering the introduction about the Magic Spell from Abracadabra.money, which will leverage your (3,3) strategy more powerful.
I’ll put every resource & material at the end of this article, so let’s discover how it works quickly.
Note 1: This article assumes you are doing (3,3) already, and will not treat how to get $OHM and stake it. Find it on OlympusDAO’s Gitbook.
Note 2: This article contains high-risk borrowing & leverage models, so please have a full understanding of Leveraged Yielding Positions before you proceed.
When you enter to https://abracadabra.money/ and click the ‘Borrow’ menu after connecting your Ethereum wallet, you can find wsOHM on the list.
wsOHM means ‘wrapped sOHM’, and we’ll need to ‘wrap’ your $sOHM to use as collateral to borrow $MIM(token of Abracadabra.money and valued at $1).
You could also check how many $MIM are left to borrow. The first emitted $MIM were sold out rapidly just a few hours after this spell launched yesterday, so must be aware of it before you consider borrowing.
Anyway, let’s click it.
As mentioned above, you will need to wrap your $sOHM as $wsOHM. The price of $wsOHM is different from $sOHM, so check the right-bottom of the page. Fill the slot and sign in a transaction.
Note: Does $wsOHM also get compounding automatically? YES, and Abracadabra.money will show the APY in their app(It’s not implemented yet at the time of writing this article).
Now we got the most important part. After you wrap, could choose detailed variables to borrow. Let’s have a look one by one.
Basically, you could borrow $MIM against your collateral $wsOHM. Each token’s price will be shown on the right-bottom of the page.
After you put the number of $wsOHM in the placeholder, you could choose the rate for borrowing. Then liquidation price will be calculated & shown on the page automatically. When you sign in the transaction to borrow, you’ll get $MIM according to your set.
So, are these all about the magic spells? Hell NO!
Additionally, you could take a risk with leverage if you’re brave enough to be a great magician. Do you think you’re trained enough by ohmies? Then check on the ‘Change the leverage(red box on the screen)’ to proceed.
Based on the borrowing rate, you’ll be choosing your Loops. According to Loops, other variables will differ. Let’s do a brief calculation.
Note: Swap Tolerance is different based on the market situation. Suggest you try with a small number(e.g 0.5% or 1%) first and enlarge it if you fail to proceed.
Assume to put all of $wsOHM(16.81..) as collateral. Its value will be
16.816 * 3558.57 = $59,840
and I’m going to borrow 50% against it, then I’ll get $MIM as
59,840 * 0.5 = 29,920 (in real, I gained 29,522 after excluding fees)
Assume to Loop 3x, then
- Expected MIM amount will be 51406.4
- Expected leverage will be 1.75x.
- Expected liquidation price will be $2258.23
Against the price of $wsOHM($3558.57), the expected liquidation price($2258.23) is around 63.46% of 1 $wsOHM. In the other word, if $wsOHM’s price drops more than 36.54%, you’ll be liquidated.
From the perspective of $OHM($285.91), you’ll be liquidated if its price drop below $181.43. You’ll have nothing in your account. Be careful to choose your borrow rate & Loop rate to avoid getting rekt. There’s no even magic if you get liquidated.
To find out in details how abracadabra.money leverage yielding works, feel free to refer to their Wiki: https://docs.abracadabra.money/intro/leveraged-positions “
Note: Wen you leverage, you will not see the $MIM in the balance because it already used
Once the parameters are set, you’ll be required to sign into few transactions following to approve the functions of apps & tokens and a multi-functional transaction called ‘cook’, which requires a bit expensive than others. When you use leverage, the ‘cook’ will automatically change your borrowed $MIM to $sOHM and stake to Olympus.
As a result, your (3,3) has been reinforced into (3,3) * 1.75 = (5.25, 5.25).
Of course, you can make (6,6) and others if you’re brave!
In Closing: This is just one of the ways to use Olympus. After Rari Capital and this Abracadabra.money, we don’t know what’s coming next. But only thing is there was nothing like Olympus ever. The history and innovation continue on…
Writer on Twitter: @Dave_GMI
If you’re not enough to understand calculations, here is a next series to see how was the appreciation after 12 days.
As always Ohmies, (3, 3) and see you in OT.
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