Abracadabra proposes winding down MIM at four cents on the dollar

Magic Internet Money is living up to the first word in its name. Abracadabra’s overcollateralized stablecoin, MIM, has been trading at roughly $0.0446 as of mid-September 2026, a 95%-plus decline from its intended $1 peg. The protocol is now floating a proposal to wind down the token entirely, settling outstanding debts at a fraction of their face value.

From depegging to death spiral

MIM’s troubles didn’t start overnight, but they accelerated fast once they began. In June 2026, the stablecoin slipped sharply from around $0.74 to roughly $0.49 to $0.50, triggered in part by broader market turmoil as Bitcoin fell below $60,000.

Abracadabra’s response was textbook crisis management for DeFi. The protocol raised interest rates across its Cauldron lending markets, hoping to incentivize borrowers to repay their MIM-denominated debt and reduce circulating supply. It also cut direct incentives and stopped paying Curve bribes, the liquidity mining rewards that had helped keep MIM’s peg stable through demand in Curve Finance pools.

The protocol even injected roughly $100,000 into a Curve pool as a stabilization measure in mid-June. For a token with tens of millions in circulation, that was the equivalent of tossing a bucket of water at a forest fire.

By September, MIM had cratered to approximately $0.0446. The self-reported market cap sat at around $4.63 million, with circulating supply estimated between 55 million and 104 million tokens depending on the source and timing.

How Abracadabra got here

Abracadabra launched in 2021 during DeFi’s aggressive growth phase, offering a compelling pitch: deposit yield-bearing crypto assets as collateral, and mint MIM against them. The protocol expanded across multiple chains, riding the wave of composable DeFi and deep Curve Finance integrations.

In January 2024, an exploit hit the protocol and created bad debt, causing a temporary depegging episode. While MIM recovered at the time, the incident highlighted a structural fragility: once confidence in an overcollateralized stablecoin wavers, the mechanisms designed to maintain the peg can work in reverse, accelerating outflows rather than stabilizing them.

What four cents on the dollar actually means

The proposed wind-down would settle MIM obligations at the current market price, roughly four cents per token. For anyone holding MIM as a stable store of value, that represents a loss of approximately 96 cents on every dollar.

The SPELL governance token, which powers Abracadabra’s decision-making, will likely face its own reckoning. A protocol whose flagship product is being wound down at pennies on the dollar doesn’t exactly inspire confidence in its governance token’s future utility.

MIM was once a meaningful participant in Curve’s stablecoin pools, and the loss of those pools and their associated gauge rewards removes a small but visible piece of the Curve ecosystem.

Broader implications for DeFi stablecoins

MIM’s collapse adds another data point to a growing body of evidence about the fragility of decentralized stablecoins. UST’s implosion in 2022 was the most dramatic example, but MIM’s slower, more grinding failure illustrates a different failure mode: not a single catastrophic death spiral, but a gradual loss of confidence that compounds over months until the peg becomes fiction.

When market conditions deteriorate, the collateral backing these tokens loses value at the same time demand for the stablecoin dries up. Rate hikes and liquidity incentive cuts can theoretically reduce supply, but they also signal distress, which drives more holders to exit.

Disclosure: This article was edited by Estefano Gomez. For more information on how we create and review content, see our Editorial Policy.