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Bear market liquidation continues! Abracadabra at risk of insolvency? Official response on stablecoin MIM decoupling and financial situation

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Bear market liquidation continues! Abracadabra at risk of insolvency? Official response on stablecoin MIM decoupling and financial situation

The intertwined flow of capital continues to have an impact amid the bear market. Following the Terra incident, there are rumors of 3AC, the capital side, suffering losses and bad debts, with the current market still probing lower. Twitter account @AutismCapital stated on the 18th that the stablecoin MIM may face insolvency risks.

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Under the bear market, the intertwined cash flow continues to have an impact. Following the Terra incident, rumors have emerged that the capital side 3AC has suffered losses, generating bad debts, and the current market continues to decline. On the 18th, the Twitter account @AutismCapital stated that the stablecoin MIM may face insolvency risks.

He mentioned that the Terra incident led to the protocol Abracadabra, which issues MIM, generating bad debts of about $12 million due to the inability to liquidate quickly. The overview analysis page was also taken down afterwards. Furthermore, the official party did not actively handle the bad debts, but instead spent money to buy CRV tokens. Founder Dani also liquidated his positions in SPELL and Abracadabra tokens, generating more bad debts. He expressed concerns that a significant drop in SPELL's value, if not liquidated in time, could lead to more bad debts and render Abracadabra insolvent.

The next day, Abracadabra released a blog post in response to the bankruptcy rumors, with the official statement that the insolvency rumors online significantly impacted its liquidity on Curve related to MIM.

However, they have always been transparent about the bad debts caused by UST, with sufficient reserve assets for repayment and repayment plans in place. Regarding the current decoupling of MIM, the official party urges users to seize arbitrage opportunities. They also claim that MIM will always maintain over-collateralization. The removal of the overview analysis page was to improve the display of the latest data. Abracadabra's treasury includes MIM and CRV, worth approximately $13.2 million, excluding SPELL.

Abracadabra disclosed the protocol's financial status:

MIM briefly dropped to 0.93, decoupling from the $1 peg, and had since recovered to the $0.99 level at the time of writing.

On the 18th, Abracadabra also adjusted the interest rate for leveraging yvDAI from 0% to 1%, requiring users leveraging MIM with yvDAI to pay interest to help stabilize the MIM price peg. It is said that the collateralized lending and borrowing rates for USDC and USDT may also be adjusted based on demand.