Gray

Abracadabra, magic internet money, a bit too “experimental” DeFi project dying out. Finally. The chain is a harsh mistress. Only cybersecurity matters. ”On the other hand, the total supply of MIM not held by protocol addresses amounts to nearly $22m. In other words, the protocol sits on approximately $21m of bad debt, and MIM’s effective backing is below $0.04 (>95% unbacked)” Short history: - Abracadabra launched in 2021 as a DeFi lending protocol. - Users deposited crypto into vaults called Cauldrons and borrowed a dollar-pegged stablecoin named MIM. - SPELL was the governance token. - Daniele Sestagalli was the public founder and was also behind Popsicle Finance and Wonderland. - A co-founder used the name Squirrel. - The project marketed itself with wizard memes and a community called Frog Nation. - At the peak of 2021 MIM was one of the larger DeFi stablecoins, with a market cap in the billions. - SPELL became important in the Curve wars because Abracadabra paid large incentives to keep MIM liquid against other stables. - The first major scandal hit in January 2022. - Investigator zachxbt showed that Wonderland treasury manager 0xSifu was Michael Patryn, co-founder of the collapsed exchange QuadrigaCX and a man with a prior fraud conviction. - Sestagalli admitted he already knew and had kept working with him. - TIME, SPELL, and ICE sold off together. - MIM slipped off its dollar peg as liquidity left Curve. - Sestagalli later said the Wonderland experiment was over. - Many people never trusted the project again after that episode. - Abracadabra also accepted Terra’s UST as collateral. - Users deposited UST, minted MIM, and looped the position. - When UST collapsed in May 2022 that collateral was nearly wiped out. - MIM depegged again in June 2022. - The team said Terra left about twelve million dollars of bad debt. - The peg later recovered for a time, but MIM had shown it inherited the failure of whatever sat under it. - Security failures then repeated. - In January 2024 a rounding bug in Cauldron logic was exploited and about six and a half million dollars was drained. MIM traded in the mid-seventies before recovering. - In March 2025 a flash-loan attack on GMX-linked vaults on Arbitrum created phantom collateral and extracted about thirteen million dollars of MIM. - In October 2025 deprecated Cauldron V4 contracts were exploited. A batch function let the attacker borrow and then reset a solvency check. About 1.79 million unbacked MIM left six vaults, was swapped to ETH, and was sent through Tornado Cash. - Combined losses from those three incidents exceeded twenty-one million dollars. - The team often said user deposits were not directly seized and that the DAO would buy back or burn MIM. - Holders still saw a stablecoin that kept creating unbacked supply when old code broke. - In June 2026 MIM fell through the seventies and eighties and then to about forty-nine cents. - The team raised interest rates on every Cauldron, including dead markets, to force repayments and shrink supply. - Curve bribes and liquidity rewards were paused. - A small pool refill earlier that month did not hold. - Circulating MIM was still around a hundred million dollars on a protocol that could no longer defend a dollar. - Stewardship of the project changed that same June. snapshot.box/#/s:abracadabra…