Abracadabra proposes winding down MIM stablecoin at four cents on the dollar

Abracadabra has proposed winding down its Magic Internet Money (MIM) stablecoin after the token collapsed to $0.0446, representing a 95% decline from its $1 peg. The proposal, to be decided by a Snapshot vote, would liquidate the protocol, swap remaining collateral into ether, and pay holders pro rata. The team estimates recoverable backing at just $900,000 against $21 million of bad debt, highlighting the fragility of overcollateralized stablecoins.

Proposed wind-down of MIM

• ▪The proposed wind-down of Magic Internet Money (MIM) would liquidate the Abracadabra protocol, swap remaining collateral into ether, and pay MIM holders pro rata.
• ▪Abracadabra proposed winding down its Magic Internet Money (MIM) stablecoin entirely, settling outstanding debts at a fraction of their face value as of September 30, 2026.
• ▪The proposed wind-down of the Magic Internet Money (MIM) stablecoin will be decided by a Snapshot vote of the Abracadabra protocol.
• ▪The Abracadabra team estimated recoverable backing for the Magic Internet Money (MIM) stablecoin at approximately $900,000 against $21 million of bad debt as of September 30, 2026.

MIM price and market status

• ▪As of September 2026, Magic Internet Money (MIM) had a self-reported market cap of around $4.63 million, with circulating supply estimated between 55 million and 104 million tokens.
• ▪Magic Internet Money (MIM) experienced a sharp decline in June 2026, falling from around $0.74 to between $0.49 and $0.50.
• ▪Magic Internet Money (MIM) traded at approximately $0.0446 as of mid-September 2026, representing a decline of over 95% from its intended $1 peg.

Impact on Curve Finance

• ▪The wind-down of Magic Internet Money (MIM) is expected to impact the SPELL governance token and remove liquidity from Curve Finance stablecoin pools.
• ▪The loss of Magic Internet Money (MIM) pools will remove their associated gauge rewards from the Curve ecosystem.

Stabilization measures in June 2026

• ▪Following a June 2026 depegging event, Abracadabra raised interest rates across its Cauldron lending markets to incentivize borrowers to repay Magic Internet Money (MIM)-denominated debt.
• ▪In mid-June 2026, Abracadabra cut direct incentives, stopped paying Curve Finance bribes, and injected approximately $100,000 into a Curve pool to stabilize Magic Internet Money (MIM).

Abracadabra protocol history

• ▪In January 2024, an exploit hit the Abracadabra protocol and created bad debt, causing a temporary depegging of the Magic Internet Money (MIM) stablecoin.
• ▪Abracadabra launched in 2021 and subsequently expanded its protocol across multiple chains.

Decentralized stablecoin fragility

• ▪The collapse of Magic Internet Money (MIM) highlights the vulnerability of decentralized, overcollateralized stablecoins to a gradual loss of confidence that compounds over months.
• ▪The implosion of the UST stablecoin in 2022 serves as a dramatic example of the fragility of decentralized stablecoins.

Debatable claims

• ▪A Snapshot vote is an appropriate way to decide MIM's liquidation
• ▪Decentralized overcollateralized stablecoins are inherently too fragile to maintain a permanent peg
• ▪Abracadabra should wind down the MIM stablecoin at four cents on the dollar