Amid the crypto market carnage this weekend, another stablecoin slipped below the $1 peg on Saturday, June 18, as the crypto asset called magic internet money (MIM) briefly dropped to a low of $0.914 per unit. The Abracadabra-issued stablecoin dropping in value follows the recent terrausd (UST) failure and USDD’s recent volatility last week.
Stablecoin Magic Internet Money Loses $1 Parity But Regains Strength After the Fall to $0.91
In mid-May 2022, the entire world witnessed an algorithmic stablecoin called terrausd (UST) depeg from its $1 parity and slide below a U.S. penny in value. In fact, UST’s failure obliterated the entire Terra blockchain ecosystem of tokens until they were near worthless.
Last week, Bitcoin.com News reported on Tron’s algorithmic stablecoin USDD and how it dropped to a low of $0.95 per unit. The Tron Reserve DAO has been adding significant amounts of reserves like USDC and TRX to keep the token overcollaterized.
Despite the funds being added, on June 18, USDD slipped to a low of $0.948 per unit and the crypto token is currently exchanging hands for $0.964 at the time of writing at 6:05 p.m. (ET).
On the same day, the Abracadabra-issued stablecoin magic internet money (MIM) also slipped below the asset’s $1 parity, dropping to a low of $0.914 per unit. By using the protocol Abracadabra.money, users create MIM by adding collateral and today, there’s 197,674,194 MIM in circulation.
MIM is leveraged on various blockchains like Ethereum, Fantom, BSC, and Avalanche. Despite the slide to $0.91, MIM did rebound on Saturday and at 6:05 p.m. (ET), it was trading for $0.992 per unit. The fall below the $1 parity brought MIM a lot of attention during the day, as the “MIM depeg” was a trending subject on social media. The day prior, one Twitter account said that MIM was “about to depeg (yet again) with a 95.8% liquidity imbalance. There’s only $6m of liquidity left in the pool.”
Abracadabra Dispells Insolvency Rumors and Addresses Depegging Incident
Furthermore, Abracadabra published a blog post that addresses “a large number of false Twitter threads.” Abracadabra said that the false information “created extreme volatility that has affected the MIM peg and the MIM-3pool liquidity on Curve Finance.”
“One of the central pieces to the FUD revolves around Abracadabra’s treasury composition,” Abracadabra’s blog post notes. “Our operational treasury, which does not include SPELL tokens, currently owns more than $13.2M in assets (at the time of writing). Roughly half of the treasury is in MIM stablecoin, and the other half is in CRV tokens which are fundamental assets for us to hold.” The decentralized finance (defi) project’s blog post adds:
If you are looking for the exact amounts, the treasury holds 6,619,923.5 MIM and 10,380,153.06 CRV tokens.
Abracadabra’s blog post also asks people with outstanding loans to repay the balance while the peg is low in order to rebalance the MIM-3pool.
“As we write this post, the health of the Curve pool continues to improve and we fully expect the MIM peg to be restored shortly. In addition, we plan to share a more detailed set of dates around when and how repayment will occur,” Abracadabra’s blog post concludes.
In addition to USDD and MIM, the stablecoin neutrino usd (USDN) has been volatile in recent times dropping below $1 parity. While it was trading for $1 at 6:05 p.m. (ET), earlier on Saturday USDN slipped to $0.931 per unit.
What do you think about the stablecoin magic internet money (MIM) depegging on Saturday? What do you think about Abracadabra’s blog post statement? Let us know what you think about this subject in the comments section below.
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Author: Jamie Redman