Abracadabra proposes to wind down MIM at four cents on the dollar

Abracadabra, the lending protocol behind the MIM stablecoin, has put an orderly wind-down to a Snapshot vote: swap what remains of the protocol's collateral into ETH and distribute it pro rata to MIM holders at roughly four cents on the dollar. The proposal, opened on September 30, 2026, is the first governance action that treats MIM as a settled loss rather than a stablecoin to defend.

What the proposal actually does

The core mechanics per the team's write-up, echoed by KuCoin and TechFlow:

1. Freeze new borrows against MIM.
2. Liquidate remaining protocol assets — Cauldron collateral and treasury — into ETH.
3. Distribute the ETH pro rata to circulating MIM holders at the redemption rate the liquidation lands at, targeted at ~$0.04 per MIM.
4. Recognise MIM as a liability senior to SPELL (the governance token). Until MIM is settled, SPELL carries no accounting claim on the treasury.

The last point is the important one for SPELL holders: the wind-down explicitly subordinates them. The proposal does not restore MIM to peg, does not haircut MIM holders in favour of SPELL, and does not deploy new collateral to prop the token up. It closes the position.

The math behind $0.04

The team's own estimates, cited in the CryptoBriefing summary:

• Executable collateral available: ~$900,000.
• Bad debt: ~$21,000,000.
• Effective backing: below $0.04 per MIM — more than 95% uncollateralised.
• Market price of MIM: ~$0.0446 as of mid-September 2026, a >95% decline from its $1 peg.

Circulating MIM sat in an estimated range of 55–104 million tokens at the time of the proposal, with a self-reported market cap around $4.63M. The redemption offer therefore roughly matches secondary-market pricing rather than clearing at the shortfall or above it.

How MIM got here

MIM launched in 2021 as an overcollateralised stablecoin issued against interest-bearing assets locked in Abracadabra's Cauldron contracts. It never fully recovered from its UST-era stress in 2022 and the January 2024 exploit that drained approximately $6.5M across four Cauldrons on Ethereum. A series of Cauldron incidents through 2024–2025 accumulated the bad debt the current proposal writes off. Attempts to stabilise MIM in June 2026 — parameter changes, incentive cuts, and a ~$100,000 injection into a Curve pool — did not arrest the drift.

Numbers block

• Redemption target: ~$0.04 per MIM (ETH distributed pro rata)
• Executable collateral: ~$900,000
• Bad debt: ~$21,000,000
• Effective backing pre-vote: <$0.04, >95% uncollateralised
• MIM market price mid-Sept 2026: ~$0.0446
• Circulating supply range: 55M – 104M MIM
• Self-reported market cap: ~$4.63M
• SPELL subordination: MIM ranks senior; SPELL holds no accounting claim until MIM is settled
• Vote venue: Snapshot (Abracadabra DAO)
• Sources: CryptoBriefing, KuCoin, TechFlow

What to watch

1. Turnout and margin. A wind-down at market price is the least contested option; a low-turnout pass tells you SPELL holders accept the subordination.
2. Cauldron unwind order. The liquidation sequence across chains (Ethereum, Arbitrum, Avalanche, Fantom, etc.) will move the collateral assets — MIM Cauldrons still hold non-trivial CVX, cvxCRV and stkGLP positions.
3. CEX delistings. Exchanges usually pull thinly-traded, wind-down-bound assets within days of the vote settling. That truncates the exit window for MIM holders who prefer secondary sale to on-chain redemption.
4. SPELL price behaviour. With SPELL formally junior to the wind-down and no path to residual value published, price should track whatever collateral remains after the ~$21M shortfall — currently zero.

Context

MIM is one of several stablecoins this cycle to settle below peg through an explicit wind-down rather than a redemption backstop — USDR (Tangible, Oct 2023) is the closest structural analogue: bad debt from illiquid collateral, a DAO vote to distribute what remains, and secondary trading pinned to the recovered value. The pattern is consistent: overcollateralised stablecoins that accumulate bad debt in one incident cycle rarely recover trust or peg, and DAOs eventually acknowledge the shortfall in governance rather than defend a fiction.