Magic Internet Money

Magic Internet Money leans on yield-bearing collateral, and that design has broken its peg more than once. MIM is the dollar stablecoin of Abracadabra, a cross-chain lending protocol where users borrow against interest-bearing assets by opening positions called cauldrons. Minted as onchain debt and over-collateralized, it carries no company redemption; the peg depends on collateral quality, liquidations and arbitrage. That model has shown real fragility. MIM fell toward 80 cents during the 2022 Terra collapse, dropped after a roughly 6.5 million dollar exploit in January 2024, and in June 2026 depegged sharply, trading near 50 cents while Abracadabra raised cauldron rates and paused incentives to shrink supply. It survives across more than a dozen chains including Ethereum, Arbitrum, Avalanche and Base. MIM is a case study in how exotic collateral amplifies both yield and tail risk.