Magic Internet Money (MIM), the native token of the Abracadabra DeFi platform, is the latest stablecoin to lose its peg as crypto markets ease.
MIM, which is the 42nd largest stablecoin by market capital, has fallen 7% in the past 24 hours and is trading around $0.9456. The unpeg comes amid a sharp decline in crypto markets, which has raised concerns about the assets supporting MIM’s value.
This was exacerbated by the MIM pool on the DeFi Curve platform showing a severe imbalance, with 96% of the pool consisting of MIM. This likely indicates that traders are abandoning the token.
MIM and Abracadabra facing insolvency charges
Crypto analyst @AutismCapitalciting insider sources, alleged that stablecoin MIM and Abracadabra are “nearly insolvent” due to $12 million in bad debt resulting from the Terra crash.
Abracadabra founder Daniele Sestagalli refuted the charges, saying the the treasury has more assets than debts. Sestagalli also shared the Treasury address, which shows that the platform has over $12 million worth of tokens.
But the Wonderland Treasury – which merged with Abracadabra earlier this year – was seen withdraw approximately $57 million USDC of a MIM Curve liquidity pool. This in turn largely unbalanced the pool.
The lack of liquidity may lead to further de-anchoring of the MIM, especially as traders abandon the token fearing more losses.
Stablecoin de-pegging a common occurrence
MIM is far from the first stablecoin to lose its peg in the ongoing crypto crash. Earlier this week, Tron’s USDD stablecoin lost its $1 peg and is now trading at $0.97.
Stablecoin stalwart Tether (USDT) also traded below its $1 peg for nearly a week, as did FRAX and Neutrino USD.
The depegging represents the extreme fear in the market as traders dump their stablecoins in favor of dollars. This in turn puts pressure on stablecoin providers to maintain peg, as well as to honor buybacks.
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