A stablecoin is supposed to be worth a dollar. Under Abracadabra’s own shutdown plan, Magic Internet Money holders would get back about 4 cents per token.
The team running the lending protocol has proposed shutting down both Abracadabra and its MIM stablecoin. The proposal says it found about $21 million of bad debt and would liquidate most of the remaining collateral into ether.
The math behind 4 cents
The proposal doesn’t try to soften the numbers. The team wrote that after a series of hacks, MIM is “severely under-backed with no viable path back to parity.”
The collateral backing MIM debt totals around $1.2 million. Roughly $300,000 of that sits in an immutable Arbitrum WETH cauldron whose interest rate can’t be changed. That leaves about $900,000 the team can act on.
Nearly $22 million of MIM sits outside protocol addresses. The team put the shortfall at “approximately $21m of bad debt,” adding that “MIM’s effective backing is below $0.04 (>95% unbacked).”
The market had already priced most of that in. MIM traded near $0.029 on Wednesday, below even the backing figure in the proposal.
A vote with two voters
The Snapshot vote went up on Sept. 29 and closes at 1:24 p.m. ET on Wednesday. As of Wednesday morning, two wallets had voted.
The address that submitted the proposal cast about 100 million in voting power in favor. One other wallet cast about 523,000 against. That gives the proposer about 99.5% of the voting power cast so far, which means the outcome isn’t in much doubt.
This isn’t the first lopsided vote here. Nearly four months ago, a June proposal handed operational stewardship and treasury management to a group led by an entity called Anubis. Only two wallets voted on that one too.
How the payout would work
Abracadabra’s lending markets are called cauldrons. Under the plan, the protocol would pull collateral out of them, swap it into ether and distribute it through a Merkl contract.
Borrowers get paid first, in a sense. They’d receive their collateral’s value minus their MIM debt, with that debt counted at $1 per MIM. MIM holders would split whatever remains pro rata.
That $1 accounting matters. Borrowers repay at face value while holders recover pennies, so the people who borrowed MIM come out in a very different position from the people who held it.
A snapshot of MIM balances and cauldron positions would be taken once all collateral is swapped, and no earlier than Oct. 15. If you hold MIM and don’t claim within six months, your share goes to holders who did claim, up to $1 per MIM. Anything left after that goes to borrowers.
Why not just raise rates?
The team said it considered the obvious alternative: raising interest rates to force liquidations and push MIM’s price up. It decided the bump would be brief and “benefit only the fastest sellers.”
There’s also an outside deadline. LayerZero Labs is retiring its V1 relayer, and funds must be withdrawn before Dec. 15. That puts about $1 million in Abracadabra’s Stargate USDC and USDT cauldrons at risk if nobody acts.
SPELL holders are last in line
Citing legal counsel, the proposal said MIM is a liability that ranks above the SPELL governance token. “Until this liability can be served fully, SPELL token does not retain any accounting value,” it said.
With MIM backed at under 4 cents on the dollar, “served fully” isn’t happening. Read plainly, the proposal says SPELL holders get nothing.
Three exploits got it here
The hacks the team mentions are a matter of record. In January 2024, a $6.5 million exploit knocked MIM off its peg.
In March 2025, an attacker drained about $13 million from cauldrons tied to GMX liquidity tokens, an exploit Abracadabra confirmed on X. Then in October 2025, an attacker minted about 1.79 million MIM from deprecated cauldrons, which the DAO treasury later bought back.
What happens after the vote
If the plan passes, the protocol will be shut down once the liquidation is complete. Positions in immutable cauldrons will remain withdrawable onchain, since nobody can switch those off.
The team said it will not bear “any legal or technical responsibility to maintain the protocol.” The interface will stay online without active maintenance.
If you still hold MIM, write down Oct. 15 and the six-month claim window that follows. About 4 cents a token isn’t much, but if you don’t claim, that money goes to holders who did.
