DeFi protocol Abracadabra raises interest rates to curb supply after its MIM stablecoin depegs by over 50% from its $1 target.
Abracadabra has implemented emergency measures, including higher interest rates across all Cauldrons, to address a severe depeg of its Magic Internet Money (MIM) stablecoin. MIM fell to 49 cents on Wednesday, down from its $1 peg, amid thin liquidity and bear market conditions.
The stablecoin had previously slipped to 74 cents in mid-June before a brief recovery to 89 cents. The current circulating supply of MIM stands at approximately $104 million. The protocol uses interest-bearing tokens as collateral to mint MIM, which launched in May 2021.
The move aims to incentivize debt repayment and reduce outstanding MIM supply, as the depeg creates opportunities for borrowers to repay debt at a discount.