Abracadabra breaks its DAO to shut down protocol

Abracadabra DAO, the DeFi project behind the long-depegged Magic Internet Money (MIM) stablecoin, has passed a controversial proposal to wind down the protocol on its second attempt after reducing quorum requirements from 3 billion to 300 million SPELL, worth just $26,000.

The proposed “orderly wind down” came less than four months after the DAO passed a “strategic transition of stewardship,” promising to “revitalize Abracadabra… and establish a clear roadmap for the long-term success of SPELL and the broader Abracadabra platform.”

Following a period in which the stewardship team claims it “worked effortlessly” to turn things around, an attempt to shut down the once-$6 billion protocol, in late September, proved controversial.

It put the “actionable backing” of MIM’s 22 million supply at just $900,000 and proposed a resolution for MIM holders of four cents on the dollar.

What wasn’t mentioned, however, were the unexplained outflows worth almost $9 million in June and July. But the proposal was keen to point out the “risk of facing users enforcing a liquidation via legal actions, which is more costly to all stakeholders.”

Read more: Abracadabra blames hacks for shutdown amid ‘looting’ claims

Last week’s “refined” vote was identical apart from a lower quorum threshold, and was pushed over its newly-defined line thanks to votes cast directly from an address labelled “Abracadabra.Money: MIM Treasury” on Etherscan.

No mention has been made of the $3 million worth of WETH that the address has accumulated in recent days, either, nor whether that sum will be added to the “effective backing” of MIM.

MORE ON ABRACADABRA DAO TREASURY LOOTING IN PROGRESS

More Abracadabra shutdown context, because the previous tweet exceeded its character limits.

The "proposal" to shut down Abracadabra, one of the early questionable stablecoin projects, had some quite questionable DAO activity… https://t.co/n8FEcxGx38

Read more: Magic Internet Money loses its sparkle as DeFi platform hacked for $6.5M

Just two voters participated in the latest Snapshot vote, the first run of which was branded “treasury looting,” but ultimately failed to pass quorum with just over 100 million SPELL votes in total.

One of these addresses, the proposal’s author, cast 100 million SPELL votes in favour.

Of these, 40 million were bought with USDC received directly from the MIM treasury-labelled wallet and a further 59.5 million were bought with WETH, the majority of which also came from the treasury wallet. The other 296 million votes were cast by the treasury wallet itself.

Keen eyed readers will notice that the 396 million votes also fall well short of the 3 billion SPELL quorum set for Abracadabra DAO votes.

The “refined” proposal contains a “quorum adjustment disclosure,” stating that, with just over 1 billion SPELL supply at time of publishing the proposal, “the current quorum is therefore totally irrelevant and needs to be adjusted… [to avoid] paralysing the protocol.”

However, with the Snapshot space’s admin keys held by previous Abracadabra team members who are “not reachable,” the space’s “hardcoded quorum cannot be fixed.” 

Citing “simplicity” and users’ “best interests” the proposal states that a new quorum will be set at 30% vote participation, “in line with market standards.”

The vote, despite Snapshot displaying it as “rejected,” is apparently passed, according to the terms set out in the quorum adjustment disclosure.

Protos has reached out to Jack Niewold, named as Project Lead in the June proposal, but hadn’t received a response.

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