Abracadabra proposes an orderly shutdown of MIM and its protocol, with MIM’s effective collateralization rate below 4%.

According to the governance page of Abracadabra, the decentralized finance (DeFi) lending platform behind the MIM stablecoin, the community has proposed a plan to orderly shut down the MIM stablecoin and the Abracadabra protocol. The proposal states that following a series of attacks, MIM is currently undercollateralized with no feasible path to restore its peg, so the protocol will gradually liquidate and distribute remaining assets. Total collateral backing MIM debt is approximately $1.2 million, of which around $300,000 sits in the Arbitrum WETH Cauldron, leaving roughly $900,000 in usable collateral for repaying MIM. Meanwhile, circulating MIM not held in protocol addresses is nearly $22 million, translating to about $21 million in bad debt for the protocol, with MIM’s effective collateral ratio below 4%. Under the proposal, the protocol will extract collateral from all cauldrons, convert it to ETH, and distribute it proportionally via the Merkl contract to borrowers and MIM holders. Borrowers will receive the value of their deposited collateral minus their MIM debt; MIM holders will share the remaining assets based on their MIM balance at the snapshot, with an estimated ~$0.04 per MIM. Additionally, the proposal notes that LayerZero V1 relays were recently deprecated, requiring fund withdrawals by December 15, putting approximately $1 million in collateral in the Stargate USDC and USDT Cauldrons at risk. The plan calls for taking snapshots of MIM balances and Cauldron/DegenBox positions after October 15, 2026; after collateral conversion, the Merkl contract will be deployed and redemptions opened. The governance vote ends on October 1, with current "yes" votes accounting for 99.48%.