MIM depegs from Dollar as Luna domino effect persists

MIM began de-pegging at around 7:40 pm EST (5:10 pm IST) on Friday, and the token's price dropped to $0.926 within three hours

By Shashank Bhardwaj

Image: Shutterstock

MIM (Magic Internet Money), an Abracadabra ecosystem stablecoin pegged to the US dollar, has become one of the many coins that have been losing their $1 worth amid an untimely crypto winter.

The de-pegging began around 7:40 EST (5:10 pm IST) and all of a sudden the MIM token was trading at $0.926. Twitter user @AutismCapital alleged in a tweet that the death spiral of Terra's Luna Classic (LUNC) and TerraUSD Classic (UST) had a major impact on investors as well as several crypto projects, including Abracadabra's MIM token ecosystem.

According to AutismCapital, Abracadabra incurred $12 million in bad debt as a direct result of Terra's abrupt death "because liquidations couldn't materialise fast enough to meet the protocol's MIM liabilities."

The tweet read: “We have a scoop from one of our associate autists: MIM (Magic Money Internet) may be nearly insolvent, MIM is one of the larger stablecoins, with a market cap of ~$300M. We can’t believe that a project called Magic Internet Money has been acting irresponsibly either.”

Daniele Sestagalli, the founder of Abracadabra, rejected the rumours of insolvency by assuring that adequate cash was available to pay off the mounting obligations, which had been attributed to dropping MIM prices. Sestagalli stated, "[The Abracadabra] Treasury has more money than the debt, and $CRV are valuable for the protocol."

Sestagalli publicly revealed the treasury address, which held $12 million in assets and asked worried investors to verify it using on-chain data. @AutismCapital, on the other hand, said that Sestagalli's bad debt was created five days ago and published the screenshot below of his conversation about it on MIM's Discord channel.

While the potential of insolvency continues to loom over the Abracadabra protocol, whether through the MIM treasury's drop in valuation or the creation of new bad debt, investors are encouraged to monitor market swings and research properly before making any investments.

The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash

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