TLDR
- MIM stablecoin dropped to $0.49, more than 50% below its $1 target
- Abracadabra raised interest rates across all Cauldrons to push borrowers to repay debt
- The protocol paused Curve bribes and liquidity incentives to focus on supply reduction
- An earlier $100,000 liquidity injection in June failed to stop the depeg
- Bitcoin fell below $60,000 in the same period, adding broader market pressure
Abracadabra’s Magic Internet Money stablecoin lost more than half its intended value this week, dropping to around $0.49. The protocol launched emergency measures on Wednesday to try to bring it back to its $1 peg.
We're acutely aware of the $MIM depeg and are taking emergency actions to remedy the situation.
Effective immediately, we will begin gradually increasing interest rates across all Cauldrons, including deprecated markets, to encourage debt repayment and reduce outstanding $MIM…
— 🧙🏼♂️ (@MIM_Spell) June 24, 2026
MIM first slipped in mid-June, falling to $0.74 before briefly recovering to $0.89. It then dropped sharply to $0.49, according to CoinMarketCap. The current circulating supply stands at roughly $104 million.
What Abracadabra Is Doing
The protocol announced it would raise interest rates across all of its Cauldrons. Cauldrons are Abracadabra’s lending markets, where users deposit collateral and borrow MIM.
Higher rates make it more expensive to hold open debt. That is designed to push borrowers to repay sooner, which burns MIM and reduces the total supply in circulation.
The rate increases cover both active and older, deprecated markets. Abracadabra has not given a fixed end date for the emergency measures.
The protocol also said it is pausing Curve bribes and liquidity incentives until MIM returns to its peg. That is a shift from its previous strategy of rewarding liquidity providers.
The Discount Repayment Window
Abracadabra pointed out that borrowers can currently buy MIM on the open market below $1, then use it to repay debt at face value. That creates a financial incentive to close positions now.
The team called this a “natural incentive” for borrowers to act. If enough repayments happen, MIM supply contracts and pressure on the peg eases.
Earlier in June, on the 15th, Abracadabra added $100,000 in MIM, USDT, and USDC to a Curve liquidity pool. The goal was to restore pool balance after withdrawals tied to DeFi incentive changes.
That step did not hold. The peg broke again within days, this time more sharply.
Liquidity Remains the Core Problem
MIM depends on balanced liquidity pools, mainly on Curve Finance, to stay near $1. When those pools become thin or one-sided, even small sell orders can push the price down fast.
The broader crypto market was also weak during this period. Bitcoin dropped below $60,000 for the second time in June, triggering over $850 million in liquidations across the market.
Abracadabra also dealt with an exploit in October 2025, when attackers drained around $1.8 million from its Cauldrons through a logic flaw. That event is separate from the current depeg but kept the protocol under scrutiny.
The team said its goal is to “restore confidence, improve market structure, and return MIM to a healthy peg.” More recovery steps are being reviewed and will be shared once finalized.
The next test is whether borrowers repay at scale. If they do, supply drops and the peg has a path back. If liquidity stays thin, MIM remains exposed to further moves.
