In a significant development in the decentralized finance landscape, the team behind the Abracadabra protocol has proposed shutting down its lending platform and MIM stablecoin. If the plan proceeds, MIM holders are anticipated to receive approximately $0.04 per token. The voting process for this proposal commenced on September 29 and is expected to conclude on Wednesday evening, local Turkish time.
Proposed Liquidation Receives Overwhelming Support
As of Wednesday morning, the voting process revealed that participation was limited to just two wallets. An address representing the proposal’s advocate cast a favorable vote with roughly 100 million vote power, while another opposing wallet held approximately 523,000 vote power. This resulted in an overwhelming 99.5% of the vote supporting the proposal put forth.
Known for its lending and collateral-backed stablecoin structures, Abracadabra’s team highlighted recent attacks that severely compromised MIM’s collateral structure. They argue that viable paths to restore the stablecoin to its intended $1 peg are no longer feasible.
Collateral Shortfall Approaches $21 Million
According to the proposal, the total collateral backing the MIM debt stands at around $1.2 million. However, roughly $300,000 is locked in a non-changeable Arbitrum WETH cauldron, leaving only about $900,000 under direct manipulation. Outside of protocol addresses, approximately 22 million MIM tokens remain in circulation.
MIM’s effective collateral value has sunk below $0.04, leaving over 95% of its supply unfunded.
Based on these figures, the team calculates a problematic debt close to $21 million. CoinGecko data indicates that MIM traded at around $0.029 on Wednesday.
A Blueprint for Liquidation
Under the proposed plan, the protocol will reclaim collateral from the lending markets known as cauldrons, convert it to Ether, and distribute it via a Merkl contract. Debtors will receive the remaining collateral value once their MIM debts are offset at a token value of $1. Surplus assets will then be distributed proportionally among MIM holders.
An instantaneous snapshot of MIM balances and cauldron positions will be captured after converting all collateral, but no earlier than October 15. Any assets unclaimed within six months will first be distributed to claiming MIM holders up to $1 per token, with remaining amounts redirected to debtors.
The team considered increasing interest rates to expedite forced liquidations, but deemed it a short-lived solution benefiting swift sellers.
LayerZero Timeline and Past Breaches Intensify Pressure
The proposal also highlights that LayerZero Labs plans to terminate its V1 relayer service, with funds necessitating withdrawal by December 15. Consequently, approximately $1 million in Stargate USDC and USDT cauldrons face potential risk.
Legal advice underscores that MIM liabilities take precedence over the SPELL governance token. Until MIM obligations are fully met, SPELL holds no accounting value.
The protocol has previously suffered a string of security breaches. A $6.5 million hack in January 2024 destabilized MIM’s value, while $13 million was withdrawn from GMX liquidity token-tied cauldrons in March 2025. October 2025 saw roughly 1.79 million MIM issued from out-of-service cauldrons, later repossessed by the DAO treasury.
Should the plan be approved, the protocol will be closed post-liquidation. Immutable cauldron positions will remain accessible on-chain, but the team has declared no legal or technical commitment to maintain the protocol. Although the interface will remain online, active maintenance will cease.
