Decentralized finance protocol Abracadabra Finance announced emergency measures on X on June 25 to address the de-pegging crisis of MIM (Magic Internet Money) stablecoin. As of Thursday, MIM was trading at $0.5027, down 36.65% in a single day. The emergency measures took effect immediately, including gradually raising all Cauldron interest rates and suspending direct incentives.
Abracadabra Raises Cauldron Interest Rates, Direct Incentives and Curve Bribes Suspended
(Source: Trading View)
Abracadabra's statement on X outlined three emergency measures effective immediately:
· First, gradually raise all Cauldron interest rates (including deprecated markets) to encourage borrowers to repay debt and reduce MIM circulating supply. The protocol noted that the current de-peg itself provides a natural incentive for borrowers to repay debt at a discount, which helps accelerate supply contraction.
· Second, direct incentives and Curve bribes have been suspended until MIM returns to peg.
· Third, additional recovery plans are under evaluation, with no specific plan announced yet. The protocol said it will update in a timely manner once a plan is finalized.
The protocol stated: "Our priority is simple: restore confidence, improve market structure, and bring MIM back to a healthy (and liquid) peg."
Abracadabra Injects $100,000 into Curve and Announces 140 Million SPELL Incentive Plan
According to a Cryptonews report from June 15, 2026, after identifying an unexpected liquidity drain, Abracadabra injected $100,000 (comprising MIM, USDT, and USDC) into its main liquidity pool on Curve Finance. The liquidity crisis was triggered by the protocol's adjustment of DeFi incentive strategies, which changed the reward structure for liquidity providers. In a statement on June 15, the protocol said improving MIM's liquidity was its top operational priority at the time.
The protocol also announced plans to launch a liquidity incentive program on June 18, with an initial supply of 140 million SPELL tokens allocated to users providing liquidity to the MIM pool, aiming to attract more capital and reduce the extent of de-peg.
Frequently Asked Questions
How did the MIM stablecoin de-peg occur?
According to Abracadabra's explanation on June 15, the crisis was triggered by the protocol's adjustment of DeFi incentive strategies, which changed the reward structure for liquidity providers, leading to an unexpected liquidity drain in Curve's liquidity pool. On June 25, the MIM de-peg worsened further, with a 24-hour decline of 36.65% to $0.5027.
How does raising Cauldron interest rates help restore the MIM peg?
The protocol explained that raising interest rates increases the holding cost of MIM loans, prompting borrowers to prioritize debt repayment. At the same time, MIM's current de-peg level of around $0.50 provides a natural incentive for borrowers to repay at a discount. Together, these reduce MIM's circulating supply, creating a self-reinforcing mechanism of supply contraction.
What are the specific details of the additional recovery plan announced by Abracadabra?
As of June 25, 2026, Abracadabra stated that the additional recovery plan is still under evaluation, with no specific plan announced yet. The protocol said in its X statement that it will provide timely updates once a plan is finalized.
