Abracadabra raises rates after MIM stablecoin falls 50% below peg

Decentralized finance platform Abracadabra launched emergency measures after its crypto-collateralized stablecoin, Magic Internet Money (MIM), slipped about 50% below its $1 peg. The protocol said it will immediately begin gradually increasing interest rates across all Cauldrons, including deprecated markets, to encourage debt repayment and reduce outstanding MIM supply.

Abracadabra, an omnichain DeFi lending platform that mints MIM against interest-bearing tokens, has seen the stablecoin struggle since mid-June: it fell to $0.74, briefly recovered to $0.89, then dropped to $0.49. The current circulating supply is about $104 million.

Raising Cauldron interest rates is intended to make borrowing more expensive, prompting repayments that burn MIM and contract supply to help restore the peg. The action follows a $100,000 injection into the primary Curve Finance liquidity pool on June 15 meant to shore up balance after unexpected withdrawals.

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