Magic Internet Money (MIM), a USD-pegged stablecoin of the Abracadabra ecosystem, has joined the ranks of tokens that lost their $1 stablecoin in an untimely crypto winter. The sudden de-peg of the MIM token started yesterday evening. Then, the token’s price dropped to $0.926 in just three hours. Behind this event is thought to be the death spiral in the Terra (LUNA) ecosystem. Here are the details…
MIM algorithmic stablecoin drops after Terra (LUNA)’s UST
Terra’s LUNA and TerraUSD (UST) death spiral hasn’t just affected investors. It has also negatively impacted numerous crypto projects, including Abracadabra’s MIM token, as claimed by Twitter account “AutismCapital.” Based on insider information, AutismCapital claimed that Abracadabra incurred $12 million in debt as a direct result of Terra’s sudden downfall. According to the user, “the purges did not occur quickly enough to meet the protocol’s MIM obligations”.
But Abracadabra founder Daniele Sestagalli has denied bankruptcy claims. He said he had ample resources to pay back debts attributed to falling MIM prices. Sestagalli said:
Abracadabra has more money in his treasury than in debt. The CRV is valuable to the protocol.
Algorithmic stablecoins are losing value
Reiterating his stance, Sestagalli publicly shared his treasury address with $12 million in assets. It asked interested investors to verify the same thing using on-chain data. On the other hand, Autism Capital claimed that Sestagalli’s dubious debt was created five days ago. He shared the screenshot below showing MIM talking about it in his Discord group.
The risk of bankruptcy continues to threaten the Abracadabra protocol as the MIM treasury continues to depreciate or more debt builds up. For this reason, investors are advised to follow market fluctuations and do their own research (DYOR) before making investment decisions. Meanwhile, a de-peg event occurred in another stablecoin , as we have reported as Cryptokoin.com. De-peg means the stablecoin leaves its stablecoin at a ratio of 1:1. Five days ago, on June 13, the price of stablecoin protocol USDD dropped to $0.97 on major crypto exchanges.
Tron DAO Reserve announced that it has received 700 million USD Coins (USDC) to defend the USDD stable to assist during market fluctuations. As a result of the funds infusion, the team behind the stablecoin announced that the collateralization rate of USDD has now increased to 300 percent. Regardless of the overall crypto decline, these developments towards USDD have negatively impacted the value of TRON (TRX).
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