Abracadabra Rolls Out Emergency Steps After MIM Stablecoin Falls More Than 50% Below Peg
Abracadabra has launched emergency measures to shore up Magic Internet Money (MIM) after the dollar-pegged stablecoin slid more than 50% below its intended $1 level.
In a statement posted Wednesday, the DeFi lending protocol said the response takes effect immediately and centers on making borrowing more expensive across its lending markets. Abracadabra plans to steadily lift interest rates across its "Cauldrons"—including markets it has previously labeled as deprecated—to encourage borrowers to repay, reduce outstanding debt, and shrink MIM’s circulating supply.
MIM is minted when users borrow against yield-bearing collateral held in Abracadabra’s Cauldrons. While the system is collateral-backed, the protocol emphasized that peg stability ultimately relies on deep, functional liquidity across DeFi venues. When liquidity is thin, selling pressure can push the token further away from $1 and make recovery more difficult.
Abracadabra argued that the discount itself should create an incentive for repayment: when MIM trades below $1, borrowers can buy MIM in the market and repay liabilities at a lower effective cost than the amount originally borrowed. The protocol said its goal is to "restore confidence, improve market structure, and return MIM to a healthy (and liquid) peg."
Price moves over the past two weeks have been sharp. CoinMarketCap data shows MIM began slipping in mid-June, falling to about $0.74, rebounding briefly to around $0.89, then dropping again to roughly $0.49 by Wednesday. CoinMarketCap listed circulating supply at about $104 million at the time of reporting.
The latest steps follow an earlier attempt to bolster liquidity. On June 15, after the initial move off-peg, Abracadabra said it injected $100,000 into its primary liquidity pool on Curve Finance, citing "unexpected liquidity withdrawals" tied to changes in DeFi incentive strategies. Despite that support, the depeg deepened, highlighting how liquidity constraints can amplify stress in crypto-collateralized stablecoins.
The depeg also coincided with broader market weakness. The report noted the overall crypto market was down about 3% over the prior 24 hours, while Bitcoin briefly dipped below $60,000—conditions that can prompt liquidity providers to pull back and increase the likelihood of dislocations.
Market participants will be watching whether higher Cauldron rates accelerate repayments quickly enough to contract supply, and whether liquidity around Curve pools stabilizes. Key indicators include MIM’s price versus $1, depth of liquidity in major pools, and signs that repayment activity is rising as borrowing costs increase.
