Magic Internet Money (MIM) Stablecoin Depegs Amid Insolvency FUD

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.

With over five years of experience in global financial markets, Ambar intends to leverage this knowledge for the rapidly expanding world of crypto and DeFi. His interest lies primarily in researching the impact of geopolitical developments on crypto markets and what this could mean for your bitcoin holdings. When he’s not scouring the web for the latest news, you can find him playing video games or watching Seinfeld reruns. You can reach him at [email protected]

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