Abracadabra’s MIM stablecoin took a major hit on June 12, falling as low as $0.87 across multiple chains. The dollar-pegged token’s slide adds to a growing list of algorithmic stablecoins that failed to hold their $1 target when liquidity dried up.
Blockchain security firm Blockaid flagged the depeg on Arbitrum. 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. Onchain data wasn’t much better, with MIM changing hands at $0.871 to $0.874 across chains—an 11% slide in 24 hours.
Not the first algorithmic stablecoin to break its peg
MIM isn’t the first algorithmic stablecoin to break under liquidity stress, and history suggests it won’t 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, not from the issuer. Following that incident, Ethena proposed a buyback mechanism to 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 and stated that primary market redemptions continued to function normally. The token recovered to $0.998 after the intervention.
Thin liquidity is the common culprit
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 USDT and USDC. This makes them more susceptible to depegging when liquidity thins out.
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 it was building “Abracadabra V2,” described as a shift toward a private banking experience.
The Abracadabra team posted on X about a governance proposal to add a MIM-2Pool gauge on Curve Finance to increase MIM’s onchain liquidity. That proposal was submitted on June 11, just one day before the depeg incident. If it passes the seven-day governance vote, the pool would become eligible for $CRV emissions.
What happens next
Traders holding MIM positions on Arbitrum or other chains are watching liquidity conditions closely, wondering if the token will stabilize or 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. For now, MIM holders are left waiting.
