What is MIM?

MIM stands for Magic Internet Money and is an algorithmic stable coin (just like UST) for the Abracadabra.money decentralized platform. This means that the coin is entirely decentralized unlike other stable coins like USDT and USDC. The price of MIM stays pegged to the dollar using arbitrage incentives. When MIM is trading below USD1.00, arbitrageurs are incentivized to buy MIM at a discounted price, and potentially pay off some of their debt at a cheaper price than if MIM were USD1.00. If MIM is trading above USD1.00, arbitrageurs are incentivized to borrow more MIM and sell it at a premium. source

MIM news

Only January 27th, a tweet was released with quite catastrophic news for MIM. One of the Abracadabra team members, 0xSifu, was doxed. It turned out he's real name is Micheal Patryn, who is the co-founder of a Canadian crypto exchange called QuadrigaCX that collapsed after the founder, Gerald Cotten, disappeared with 169 million dollars.

This news caused massive selling pressure on the MIM coin, as users no longer had faith in the project. This selling pressure is reflected in the graph of the peg of MIM below:

Peg vs UST

As users were starting to lose confidence in MIM, this also had effects on another major algorithmic stablecoin: UST. As can be seen in the graph below the UST peg also went down slightly with MIM. Users were started to lose confidence in algorithmic stable coins entirely, which meant that UST was also suffering for a few days and even showed a slight correlation with the price of MIM during those days.

As can be seen, at the lowest point, the price of MIM was about 0.97 USD which is about a 3% deviation from its peg. This is quite a substation for a stable coin, so users were rightfully scared that MIM might lose its peg entirely. Luckily, this did not happen. In the days that followed MIM slowly was able to get to peg as users realised the situation might have been a bit of an overreaction.