MIM Depegs To $0.50 As Abracadabra Raises Cauldron Rates

Magic Internet Money fell sharply below its intended $1 peg, with MIM on Ethereum trading near $0.50 after a volatile 24-hour window that pushed the stablecoin as low as about $0.43. The move left MIM roughly 50% below peg at the latest tracked price, with the market still showing thin and uneven liquidity across available pools.

CoinGecko data placed MIM near $0.5002, down 29.9% over 24 hours and 41.8% over seven days. The 24-hour range stood between $0.4304 and $0.7317, while reported 24-hour volume was about $350,000. The Ethereum-tracked MIM market carried a market capitalization near $27.8 million, based on roughly 56 million circulating MIM.

The depeg hit a stablecoin built around Abracadabra’s lending system, where users deposit collateral into Cauldrons and borrow MIM against that collateral. Abracadabra describes MIM as a USD-denominated stablecoin minted through an omnichain DeFi lending platform that uses interest-bearing tokens as collateral.

Abracadabra Moves To Cut MIM Supply

The MIM team said it is taking emergency action by gradually increasing interest rates across all Cauldrons, including deprecated markets. The move is designed to make outstanding debt more expensive to carry and push borrowers toward repayment, reducing the amount of MIM in circulation while the token trades below peg.

The mechanism creates a direct repayment incentive. When MIM trades at a discount, borrowers can buy MIM below $1 and use it to repay debt that was originally denominated at the stablecoin’s face value. Abracadabra framed that discount as a path toward faster supply contraction, because repayment removes borrowed MIM debt from the system and can reduce pressure on the peg.

Cauldrons are Abracadabra’s isolated lending markets, where collateral, borrowed MIM, interest and liquidation conditions are managed separately. Raising rates across active and deprecated markets broadens the repayment pressure beyond only the most visible lending pools.

Incentives And Curve Bribes Paused

Direct incentives and Curve bribes will be temporarily stopped until MIM returns to peg. That removes emissions and liquidity incentives while the protocol focuses on shrinking supply and restoring a healthier market structure for MIM.

The decision also changes the short-term economics around liquidity. Incentives can support pool depth and participation, but during a deep depeg they can also keep emissions flowing while confidence is under pressure. Abracadabra’s immediate response is now centered on debt repayment, supply reduction and tighter rate pressure rather than continuing external liquidity rewards during the dislocation.

The MIM break adds another stress point to the stablecoin liquidity layer that supports much of crypto trading. It also lands during a market already punishing thin liquidity, concentrated supply and fragile confidence, the same pressure visible when MemeCore’s M token crashed more than 75% as ZachXBT questioned major exchange listings.