MIM Stablecoin Destabilization: Abracadabra’s $6.49M Loss and Its Impact on the Crypto Market

Abracadabra Money Confirms $6.49 Million Exploit Involving Ethereum Cauldrons

The cross-chain lending platform, Abracadabra Money, has announced a $6.49 million exploit involving the protocol’s Ethereum cauldrons. These cauldrons allow users to borrow the Magic Internet Money (MIM) stablecoin using various assets as collateral.

The MIM development team has acknowledged the exploit and is currently conducting an investigation. They have also stated that the protocol’s governing body plans to compensate victims through a buy-back and burn process.

The security firm PeckShield flagged the $6.49 million exploit on Tuesday. According to the firm, the unknown exploiter initially funded the attack with one Ether through the cryptocurrency mixer, Tornado Cash.

MIM Stablecoin Loses Dollar Peg After Exploit

Less than an hour after the exploit was announced, the algorithmic U.S. dollar-pegged stablecoin, MIM, lost its dollar peg and fell to $0.77. However, it has since recovered to its current value of $0.94, according to CoinMarketCap data.

A recent report from CertiK, a blockchain security firm, suggests that a “rounding issue” may have been the cause of a recent exploit. The attacker was able to repeatedly call the “userBorrowPart()” function and then follow it with “repay()” from the protocol’s v4 cauldrons. This allowed the attacker to borrow and repay loans multiple times, ultimately draining funds from the contract.

In 2022, Magic Internet Money experienced a depegging due to the collapse of the Terra Luna ecosystem. In response, the protocol raised its interest rate on the coin by 200% in an attempt to mitigate risk from the Curve protocol.