DeFi lending protocol Abracadabra has pulled the emergency brake on its Magic Internet Money (MIM) stablecoin after it plunged to just 49 cents — a 50% collapse from its dollar peg.
The team said Wednesday it’s jacking up interest rates across every Cauldron, including deprecated markets, to force borrowers into repaying debt. That burns MIM, which contracts supply and theoretically pushes the peg back toward $1.
MIM’s trouble started in mid-June when it first slipped from parity, briefly recovered to 89 cents, then cratered. The token relies on crypto collateral and Curve Finance liquidity pools to maintain its peg, and thin order books have made it increasingly fragile.
Abracadabra had already injected $100,000 into Curve pools on June 15 to defend the peg. It wasn’t enough. A broader crypto selloff — roughly $60 billion wiped out in 24 hours, with Bitcoin briefly dipping under $60,000 — added more pressure.
The message from the team: restore confidence, improve market structure, return MIM to a healthy peg. Whether rate hikes alone can fix a stablecoin in freefall remains to be seen.
