Abracadabra Proposes Shutting Down Magic Internet Money Stablecoin

The Abracadabra team has proposed shutting down its Magic Internet Money (MIM) stablecoin due to severe under-backing and no viable path back to parity. A Snapshot vote closes on Wednesday, with the proposal already at 99.5% of the voting power cast so far. The team estimates that nearly $21 million of MIM is in bad debt, with collateral backing totaling around $1.2 million but only $900,000 available for action.

MIM holders would receive roughly 4 cents per token under the plan, which involves reclaiming collateral from lending markets, swapping it into ether, and distributing it through a Merkl contract. Borrowers would receive their collateral's value minus MIM debt, with any remaining funds split pro rata among MIM holders.

The Abracadabra team considered raising interest rates to force liquidations but concluded that the effect would be brief and benefit only fast sellers. A deadline looms as LayerZero Labs is retiring its V1 relayer on December 15, putting $1 million in Abracadabra's Stargate USDC and USDT cauldrons at risk.