Decentralized finance platform Abracadabra announced emergency measures Wednesday after its crypto-collateralized stablecoin Magic Internet Money (MIM) plunged 50% below its dollar peg to 49 cents.
The team said it is immediately and gradually increasing interest rates across all Cauldrons, including deprecated markets, to encourage debt repayment and reduce outstanding MIM supply.
MIM first slipped to 74 cents in mid-June, recovered to 89 cents, then fell to 49 cents on Wednesday, with a current circulating supply of about $104 million.
“The current depeg creates a natural incentive for borrowers to repay debt at a discount, accelerating supply contraction and strengthening the path back to the peg,” the team said. “Our priority is simple: restore confidence, improve market structure, and return MIM to a healthy and liquid peg.”
Higher Cauldron interest rates make it costlier to maintain borrowed positions, spurring repayment that burns MIM and contracts supply.
Just ten days earlier, Abracadabra had injected $100,000 into its primary liquidity pool on Curve Finance to restore balance after unexpected withdrawals due to DeFi incentive strategy changes.
Thin and imbalanced liquidity in decentralized exchange pools continues to fuel selling pressure, leaving MIM vulnerable. The broader crypto market fell about 3% in the past 24 hours, with Bitcoin briefly dropping below $60,000.