Abracadabra’s MIM stablecoin took a major reputation and valuation hit today on June 12, dropping across multiple chains to a low of $0.87. The drop in the dollar-pegged token adds to a growing list of algorithmic dollar tokens that have failed to hold their $1 target as liquidity dried up.
The depeg on Arbitrum was flagged by blockchain security company Blockaid. MIM was reportedly trading between $0.91 and $0.92 on executable routes.
Blocking aid attributed the price drop to weak and unbalanced liquidity in the Arbitrum pools.
Prices on the chain aren’t looking good either, as MIM changed hands across all chains from $0.871 to $0.874, which is an 11% drop in 24 hours.
Are algorithmic stablecoins safe after MIM depeg?
MIM isn’t the first algorithmic stablecoin to break its peg under liquidity stress, and history suggests it won’t be the last.
Ethenas $USDethe third largest stablecoin by market capitalization, crashed to $0.65 on Binance in October 2025, after a market-wide sell-off led to mass liquidations.
According to Cryptopolitan reporting at the time, more than $19 billion in leveraged crypto positions were wiped out in less than 24 hours during that event.
Ethena Labs said later $USDe remained over-collateralized throughout, and Binance confirmed that the price dislocation originated on its platform and not the issuer.
After the aftermath of that incident Ethena proposed a buyback mechanism that would deploy up to $95 million, about 1.2% of supporting assets, to buy at a discount $USDe when the token trades below $0.99 on secondary markets.
In December 2025, another algorithmic stablecoin appeared, Solstice Finance’s USX crashed to $0.10 on Solana before liquidity injections brought it back towards parity.
Solstice blamed a liquidity drop in the secondary market. It was stated that primary market redemptions continued to function normally. The token recovered to $0.998 after the intervention.
A common theme among these events is low liquidity in the secondary market. Algorithmic stablecoins rely on smart contract mechanisms and arbitrage incentives rather than direct fiat reserves, as in the case of stablecoins such as USDT and USDC, and are more susceptible to depegging events when liquidity decreases.
How does this impact Abracadabra’s latest governance proposal?
The Abracadabra team posted on X on a board proposal to add a MIM-2Pool meter to Curve Finance, as this aims to increase MIM’s onchain liquidity.
That proposal was submitted on June 11, just one day before the Depeg incident, and if it passed the seven-day board vote, the pool would qualify for $CRV emissions.
MIM is the native stablecoin of Abracadabra, a DeFi lending protocol that allows users to borrow against yield-bearing collateral. The protocol announced in March 2026 that it was building out ‘Abracadabra V2’, which it described as a shift towards a private banking experience.
Traders holding MIM positions on Arbitrum or other chains are monitoring liquidity conditions to stabilize whether they will deteriorate further. The Curve board vote on the MIM-2Pool meter closes in about six days.
If approved, $CRV emissions could attract new liquidity providers, but that timeline does nothing to address the current shortage.