Magic Internet Money (MIM), a US dollar-pegged stablecoin of the Abracadabra ecosystem, joins the growing list of tokens losing their $1 value amid an untimely crypto winter. The sudden de-pegging of the MIM token commenced roughly on June 17, 7:40 pm ET, which saw the token’s price drop to $0.926 in just three hours.
Terra’s LUNA and TerraUSD (UST) death spiral not only affected the investors but also had a negative impact on numerous crypto projects, including Abracadabra’s MIM token ecosystem — as alleged by Twitter handle @AutismCapital.
Citing an insider scoop, AutismCapital claimed that Abracadabra accrued $12 million in bad debt as a direct result of Terra’s sudden downfall “because liquidations couldn’t happen fast enough to cover the protocol’s MIM liabilities.”
We have a scoop from one of our associate autists: MIM (Magic Internet Money) may be nearly insolvent. MIM is one of the larger stablecoins, with a market cap of ~$300M.
We can’t believe that a project called Magic Internet Money has been acting irresponsibly either.
— Autism Capital (@AutismCapital) June 17, 2022
Daniele Sestagalli, the founder of Abracadabra, however, refuted the claims of insolvency by ensuring to have enough funds to pay back the piling debts — which has been attributed to the falling MIM prices. Sestagalli stated:
“[The Abracadabra] Treasury has more money than the debt and $CRV are valuable for the protocol.”
Doubling down on his stance, Sestagalli further publicly shared the treasury address holding $12 million in assets while asking concerned investors to verify the same using on-chain data.
On the other hand, Autism Capital alleged that Sestagalli’s bad debt was created five days ago and shared the below screenshot showing his conversation about the same on MIM’s Discord group.
While the risk of insolvency continues to threaten the Abracadabra protocol, either through the MIM treasury continuing to dump in value or more bad debt created, investors are advised to keep track of market fluctuations and do their own research (DYOR) before making investment decisions.
Related: USDD stablecoin falls to $0.97, DAO inserts $700M to defend the peg
Five days ago, on June 13, Stablecoin protocol USDD’s price dipped to $0.97 on major crypto exchanges.
If you subtract $TRXit turns out collateralization ratio is currently 73%
— Res ®️ (@resdegen) June 12, 2022
To help out during the market fluctuations, the Tron DAO Reserve announced that it received 700 million USD Coin (USDC) to defend the USDD peg. As a result of the fund infusion, the team behind the stablecoin explained that the collateralization ratio of USDD is now boosted to 300%.