Abracadabra Proposes Winding Down Magic Internet Money at Four Cents on the Dollar

Abracadabra has announced a proposal to wind down its overcollateralized stablecoin, Magic Internet Money (MIM), which has seen a dramatic decline in value, trading at approximately $0.0446 as of mid-September 2026. This represents a staggering loss of over 95% from its intended $1 peg, leaving holders with minimal returns on their investments. The proposal suggests settling outstanding debts at this significantly reduced market price, effectively translating to a loss of around 96 cents for every dollar held in MIM.

The decline of MIM has been attributed to a series of events that accelerated its depegging. In June 2026, the stablecoin's value plummeted from around $0.74 to approximately $0.50, coinciding with broader market turmoil, including a drop in Bitcoin's price. In response, Abracadabra implemented measures such as raising interest rates in its lending markets and halting liquidity mining rewards to stabilize the token. However, these efforts proved insufficient, and by September, MIM's market cap had shrunk to about $4.63 million, with circulating supply estimates varying between 55 million and 104 million tokens.

MIM's troubles are not entirely new; the protocol faced a significant exploit in January 2024 that created bad debt and temporarily depegged the token. Although it recovered at that time, the incident exposed vulnerabilities in the system. The proposed wind-down of MIM raises concerns about the future of Abracadabra's governance token, SPELL, as the flagship product's collapse may undermine confidence in its utility.

The situation surrounding MIM highlights ongoing challenges within the decentralized finance (DeFi) sector, particularly regarding the stability of decentralized stablecoins. MIM's gradual decline serves as a reminder of the fragility of these financial instruments, echoing the more dramatic collapse of Terra's UST in 2022. As market conditions worsen, the value of collateral backing stablecoins diminishes, leading to a loss of confidence that can exacerbate outflows and further destabilize the token.

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Source: KLEA News