Abracadabra Moves to Shut Down MIM Stablecoin, Offering Holders Roughly 4 Cents per Token

The team running Abracadabra has proposed shutting down the lending protocol and its Magic Internet Money (MIM) stablecoin, with MIM holders set to recover about 4 cents per token.

The Snapshot vote, posted on Sept. 29, closes at 1:24 p.m. ET on Wednesday. As of Wednesday morning, two wallets had voted: the address that submitted the proposal cast about 100 million in voting power in favor, and one other wallet cast about 523,000 against. That puts the proposer at about 99.5% of the voting power cast so far.

The team wrote in the proposal that after a series of hacks, MIM is “severely under-backed with no viable path back to parity.” Collateral backing MIM debt totals around $1.2 million, but roughly $300,000 of that is tied up in an immutable Arbitrum WETH cauldron whose interest rate can’t be changed, leaving about $900,000 the team can act on. Nearly $22 million of MIM sits outside protocol addresses. The team put the gap at “approximately $21m of bad debt,” adding that “MIM’s effective backing is below $0.04 (>95% unbacked).”

MIM traded near $0.029 on Wednesday, according to CoinGecko.

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Under the plan, the protocol would reclaim collateral from its lending markets, called cauldrons, swap it into ether and distribute it through a Merkl contract. Borrowers would receive their collateral’s value minus their MIM debt, counted at $1 per MIM. MIM holders would split what remains pro rata.

A snapshot of MIM balances and cauldron positions would be taken once all collateral is swapped, and no earlier than Oct. 15. Any funds left unclaimed after six months would go to MIM holders who did claim, up to $1 per MIM, with anything beyond that going to borrowers.

The team said it weighed raising interest rates to force liquidations and push MIM’s price up, but concluded the bump would be brief and “benefit only the fastest sellers.” It also pointed to a deadline: LayerZero Labs is retiring its V1 relayer, and funds must be withdrawn before Dec. 15, putting about $1 million in Abracadabra’s Stargate USDC and USDT cauldrons at risk.

Citing legal counsel, the proposal said MIM is a liability that ranks above the SPELL governance token. “Until this liability can be served fully, SPELL token does not retain any accounting value,” it said.

The proposal comes nearly four months after a June vote handed operational stewardship and treasury management to a group led by an entity called Anubis. Only two wallets voted on that proposal as well.

The protocol had earlier been hit by a $6.5 million exploit in January 2024 that knocked MIM off its peg. In March 2025, an attacker drained about $13 million from cauldrons tied to GMX liquidity tokens, an exploit Abracadabra confirmed on X. In October 2025, an attacker minted about 1.79 million MIM from deprecated cauldrons, which the DAO treasury later bought back.

If the plan passes, the protocol will be shut down once the liquidation is complete, though positions in immutable cauldrons will remain withdrawable onchain. The team said it will not bear “any legal or technical responsibility to maintain the protocol,” and the interface will stay online without active maintenance.

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