Magic Internet Money (MIM), the native token of the Abracadabra DeFi platform, is the latest stablecoin to lose its peg as crypto markets unwind.
MIM, which is the 42nd largest stablecoin by market capital, has dropped 7% in the past 24 hours, and is trading around $0.9456. The de-pegging comes amid a sharp decline in crypto markets, which has raised concerns over the assets backing MIM’s value.
This has been exacerbated by the MIM pool on DeFi platform Curve showing a severe imbalance, with 96% of the pool consisting of MIM. It likely indicates that traders are dumping the token.
MIM, Abracadabra face accusations of insolvency
Crypto analyst @AutismCapital, citing insider sources, alleged that the MIM stablecoin, and Abracadabra are “nearly insolvent” due to $12 million of bad debt stemming from the Terra crash.
Abracadabra founder Daniele Sestagalli refuted the accusations, stating that the treasury has more assets than debt. Sestagalli also shared the address of the Treasury, which shows that the platform has over $12 million worth of tokens.
But the Wonderland Treasury- which had merged with Abracadabra earlier this year- was seen withdrawing about $57 million USDC from a MIM Curve liquidity pool. This in turn has largely imbalanced the pool.
The lack of liquidity may lead to the further de-pegging of MIM, especially as traders dump the token fearing more losses.
Stablecoin de-pegging a common occurrence
MIM is far from the first stablecoin to lose its peg in the ongoing crypto crash. Earlier this week, Tron’s USDD stablecoin lost its $1 peg, and is now trading at $0.97.
Stablecoin stalwart Tether (USDT) has also traded below its $1 peg for nearly a week, as has FRAX and Neutrino USD.
The depegging represents the extreme fear pervading in the market, with traders dumping their stablecoins in favor of dollars. This in turn puts pressure on the stablecoin providers to maintain the peg, as well as honor redemptions.
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