The Abracadabra protocol is facing a deepening crisis after its Magic Internet Money (MIM) stablecoin once again broke its dollar peg, sliding as low as $0.46 before stabilizing around $0.50. The depeg triggered emergency measures from the team, including aggressive interest rate hikes on all lending markets, while the broader market turmoil also sent MemeCore’s M token plummeting 76% in 24 hours.
Abracadabra acknowledged the situation on X, stating: “We are acutely aware of the $MIM depeg and are taking emergency actions to remedy the situation.” The protocol announced it would gradually increase interest rates across all Cauldrons—its lending markets where users deposit collateral to borrow MIM—including deprecated ones that were previously inactive. The goal is to make outstanding debt more expensive, incentivizing borrowers to repay and reduce the circulating MIM supply.
The team highlighted that the steep discount in MIM’s price creates a “natural incentive” for borrowers to buy the stablecoin cheaper on the open market and use it to close debt positions at face value, effectively burning MIM and contracting supply. In addition, Abracadabra paused all direct incentives and Curve liquidity bribes until the peg is restored, shifting focus from growth rewards to stabilization.
Liquidity pressure has been a key factor. Earlier in June, Abracadabra injected $100,000 of MIM, USDT, and USDC into a new Curve pool to restore balance after unexpected withdrawals, but that move failed to stop the sell-off. The latest depeg comes amid a broader crypto downturn—Bitcoin fell below $60,000 for the second time in June, triggering over $850 million in liquidations.
Meanwhile, MemeCore’s native M token suffered a catastrophic 76% drop in the same period. The token, which hit an all-time high just two months earlier, has now lost roughly 85% from its peak, with its market cap tumbling from around $6 billion to under $950 million. Blockchain investigator ZachXBT had previously raised concerns about MemeCore’s token distribution, alleging insiders controlled more than 90% of the supply. These allegations echo a recent incident with the SIREN token, where a single wallet’s sell-off wiped out 96% of its value.
Abracadabra said its priority is to “restore confidence, improve market structure, and return $MIM to a healthy (and liquid) peg,” adding that it is reviewing further recovery plans. For now, the success of the emergency measures depends on borrower responses and overall market liquidity. If repayments rise meaningfully, the supply contraction could ease pressure on the peg; if not, MIM remains vulnerable to sharp moves in Curve pools and other venues.
