MIM Stablecoin Loses Dollar Peg Following Abracadabra Hack

MIM stablecoin

YEREVAN (CoinChapter.com) — On Jan. 30, the decentralized stablecoin Magic Internet Money (MIM) experienced a significant drop. According to market data, it fell to an all-time low of $0.84. MIM is backed by collateral and issued by the Abracadabra DeFi lending platform. A hack on Abracadabra Finance caused the debugging of MIM. The attack resulted in a significant exploit of $6.4 million from its protocols.

According to reports, the exploit targeted the Ethereum cauldrons, a mechanism Abracadabra uses for lending and borrowing crypto assets. Specifically, the hackers exploited a vulnerability in the lending and borrowing smart contracts.

Abracadabra DeFi platform hacked

Blockchain security and data analytics company PeckShield was the first to report the $6.5 million exploit of the MIM token. According to its social media platform X (formerly Twitter) post, the attack initially funded the hack with 1 ETH using Tornado Cash.

PeckShield’s post about the Abracadabra DeFi hack. Source: X

Smart contract auditing firm CertiK also confirmed the exploit, identifying a rounding bug in the protocol as the root cause of the hack.

Reports suggest a precision loss bug in the protocol enabled the hacker to withdraw a highly inflated MIM loan relative to his deposited collateral.

The Abracadabra team confirmed the attack and announced they had taken measures to mitigate the impact on users and the stablecoin’s stability.

These measures include a plan by the protocol’s governing body to compensate victims through a buy-back and burn process. The aim is to stabilize MIM’s value and restore confidence in the protocol.

MIM Stablecoin’s post on X verifying the attack.

“We are aware of an exploit involving certain cauldrons on Ethereum. Our engineering team is triaging and investigating the situation,”
MIM announced.

MIM price on the road to recovery

Although the MIM stablecoin fell thanks to the latest hack on Abracadabra Finance, the latest data shows it is on the road to recovery.

According to the graphs made available by the portfolio management app CoinStats, the MIM price currently trades at $0.9791, still below the US dollar.

MIM stablecoin lost its peg against the US Dollar. Source: CoinStats

This is not the first time MIM has lost its price against the greenback. Magic Internet Money lost its peg against the USD in June 2022, when the collapse of the Terra ecosystem wreaked havoc in the markets.

It debugged again in November when FTT, the native token of the now-defunct FTX exchange, tanked.