Abracadabra’s MIM stablecoin took a major reputation and valuation hit today June 12 as it fell as low as $0.87 across multiple chains. The dollar-pegged token’s slide adds to a growing list of algorithmic dollar tokens that have failed to hold their $1 target when liquidity dried up.
The depeg on Arbitrum was flagged by blockchain security firm Blockaid. MIM was reportedly trading between $0.91 and $0.92 on executable routes.
Blockaid attributed the price drop to thin and imbalanced liquidity in Arbitrum pools.
The pricing onchain is not looking good either, as MIM was changing hands at $0.871 to $0.874 across chains, which is an 11% slide in 24 hours.
Are algorithmic stablecoins safe after MIM depeg?
MIM is not the first algorithmic stablecoin to break its peg under liquidity stress, and history suggests it will not be the last.
Ethena’s $USDe, the third-largest stablecoin by market cap, crashed to $0.65 on Binance in October 2025 after a market-wide selloff triggered mass liquidations.
More than $19 billion in leveraged crypto positions were wiped out in under 24 hours during that event, according to Cryptopolitan’s reporting at the time.
Ethena Labs later said $USDe remained over-collateralized throughout, and Binance confirmed the price dislocation originated on its platform and not from the issuer.
Following the aftermath of that incident, Ethena proposed a buyback mechanism that would deploy up to $95 million, about 1.2% of backing assets, to purchase discounted $USDe when the token trades below $0.99 on secondary markets.
In December 2025, another algorithmic stablecoin, Solstice Finance’s USX crashed to $0.10 on Solana before liquidity injections pulled it back toward parity.
Solstice blamed a secondary market liquidity drain. It stated that primary market redemptions continued to function normally. The token recovered to $0.998 after the intervention.
A common theme across these events is thin secondary market liquidity. Algorithmic stablecoins rely on smart contract mechanisms and arbitrage incentives instead of direct fiat reserves like in the case of stablecoins like USDT and USDC, and are more susceptible to depegging events when liquidity thins out.
How does this impact Abracadabra’s latest governance proposal?
The Abracadabra team posted on X about a governance proposal to add a MIM-2Pool gauge on Curve Finance as it aims to increase MIM’s onchain liquidity.
That proposal was submitted on June 11, just one day before the depeg incident, and should it pass the seven-day governance vote, the pool would then become eligible for $CRV emissions.
MIM is the native stablecoin of Abracadabra, a DeFi lending protocol that lets users borrow against yield-bearing collateral. The protocol announced in March 2026 that it was building out “Abracadabra V2,” which it described as a shift toward a private banking experience.
Traders holding MIM positions on Arbitrum or other chains are monitoring the liquidity conditions for stabilization or whether it will deteriorate further. The Curve governance vote on the MIM-2Pool gauge closes in roughly six days.
If approved, $CRV emissions could attract new liquidity providers, but that timeline does nothing to address the current shortfall.
