MIM held outside protocol addresses comes to nearly $22 million. “In other words, the protocol sits on approximately $21 million of bad debt, and MIM’s effective backing is below $0.04 (>95% unbacked),” the proposal says.
Why the Repeg Died
The team had studied raising interest rates across cauldrons to force liquidations, generate buying pressure and push MIM back toward $1. Abracadabra ran that playbook in June, when it hiked rates across all cauldrons, halted Curve bribes and suspended direct incentives after MIM fell about 50% below peg.
The proposal now rejects that approach. Liquidations would bleed value to liquidators through the MIM discount and liquidation fees, producing what it calls a “small, short term (minutes-long) price increase in MIM, that would benefit only the fastest sellers.”
With no way to repeg MIM, the proposal says, the protocol cannot function, because there is no point in borrowing MIM below peg. Work on a neobank product is tied to MIM and therefore adds no value to the project.
LayerZero is retiring its V1 relayer on Dec. 15. That puts roughly $1 million of collateral in the Stargate USDC and Stargate USDT cauldrons at risk, according to the proposal.
Ether and a Merkl Claim
Under the plan, collateral in eligible cauldrons would be emptied using the deployStrategy and setStrategy functions, which the team says should recover about 99.75% of it, then swapped into ether.
A snapshot of MIM balances and cauldron positions would be taken no earlier than Oct. 15. A Merkl contract would then distribute ether pro rata: borrowers receive the value of their collateral minus their MIM debt at $1 per MIM, and MIM holders split what is left, which the proposal puts at about $0.04 per MIM.
Unclaimed funds get swept after six months and redistributed to MIM holders who did claim, up to $1 per MIM, then to borrowers in proportion to their debt. Immutable positions stay untouched and withdrawable onchain. The interface stays up but will not be actively maintained.
The team engaged legal counsel before drafting the plan. Without a recovery path, the proposal says, the protocol “should be unwound and liquidated, or become at risk of facing users enforcing a liquidation via legal actions,” and failing to rescue funds at risk “could constitute legal liability.”
The Vote Closes Wednesday
Voting opened Sept. 29 at 05:24 UTC and closes Sept. 30 at 17:24 UTC. Two addresses have cast ballots: one voted for with about 100 million staked SPELL, the other against with about 523,000.
Turnout stands at 3.4% of the space’s 3 billion quorum. The 11 proposals posted to the space before this one, going back to December 2024, each drew more than 3 billion votes.
The proposal was submitted by an address that is not listed among the Snapshot space’s admins or members. Abracadabra’s X account has not posted since July 6. The abracadabra.money landing page carries a banner for “Abracadabra V2” and describes MIM as “a stablecoin with its value pegged to the USD, aiming to maintain a consistent 1:1 ratio.”
MIM is up 33% over 24 hours and trades roughly 97% below its $1 peg, CoinGecko data show. It is down 49% over seven days. SPELL is up 20% over 30 days.
Three Hacks and a Handover
Abracadabra lost $6.5 million to a rounding bug in cauldron logic in January 2024 and $13 million in a March 2025 attack on GMX-linked vaults on Arbitrum. A third exploit hit deprecated Cauldron V4 contracts on Ethereum in October 2025. The team said at the time that 1.79 million MIM were minted by the attacker and that it “bought back from the Market the entirety of affected MIM, completely reversing the effect of the attack.”
Control of the protocol changed hands in June. A Snapshot vote that closed June 4 transferred operational stewardship, treasury management and development to an entity called Anubis, listing Greg Dewitt on operations and Paul Parker and Glenn Kennedy as directors. The proposal named dao5, founded by Tekin Salimi, as a strategic partner through Alapin Holdings, alongside Nemesis Trading, and said Jack Niewold would serve as project lead. The Rodman Law Group acted as counsel to Anubis. Two addresses voted, both in favor, with a combined 5.5 billion votes.
That June proposal set out to “revitalize Abracadabra as a leading DeFi protocol” and listed expansion of utility and demand for SPELL among its priorities. The current proposal says the situation the team found “was far worse than initially expected, as not all the collateral present represents valid MIM backing.”
DefiLlama puts Abracadabra’s deposits at about $5 million.
