Abracadabra

Abracadabra launched in 2021, allowing users to mint the stablecoin MIM using interest-bearing tokens as collateral and incentivizing liquidity with SPELL, pioneering a cross-chain lending model.

Key milestones: SPELL went live for trading in 2021, laying the foundation for the MIM ecosystem; in January and June 2024, consecutive smart contract precision vulnerabilities led to losses of about $6.5 million each, causing temporary MIM depegs and prompting DAO treasury buybacks; in March 2025, a flash loan attack on the GMX Cauldron caused roughly $13 million in losses, while user funds remained safe, and the DAO repurchased MIM and absorbed bad debt in phases; in October 2025, a flaw in the deprecated Cauldron V4 cook() function led to losses of about $1.8 million, after which the protocol paused affected markets and used treasury funds for buybacks.

Long-term significance: these security incidents pushed the protocol to strengthen isolated markets, solvency checks, and risk governance. Repeated DAO treasury interventions helped defend the MIM peg and demonstrated resilience in decentralized lending. The founder later launched the on-chain analysis browser extension HUD, expanding the ecosystem's tooling dimension.

Wind-down proposal: MIM lost its peg on June 25 after collateral collapsed, trading more than 95% below $1; the DAO proposal redeems MIM at about 4 cents per dollar and drains the entire remaining SPELL supply to cover the bad debt, effectively writing the token down to zero and ending the revenue-funded SPELL buyback and burn.

Fundamentals: On-chain revenue was only about $1.32 a day in May, annual inflation runs at 59.68%, roughly 64.1 billion tokens, the price hit a low of $0.0001657 on February 6, and MIM supply has shrunk to about 44 million.

Abracadabra is a DeFi lending protocol that issues Magic Internet Money, or MIM, against interest-bearing collateral, and once approached a $6 billion valuation, with SPELL as its governance and incentive token. Its core product has been depegged for a long time; in June 2026 MIM traded roughly 50 percent below its dollar peg, and as late as July the team published a roadmap to restore the peg and improve protocol health.

Three months later the direction reversed. A late-September shutdown proposal valued the actionable backing behind MIM's 22 million supply at only about $900,000 against roughly $21 million of bad debt, leaving more than 95 percent of circulating supply uncollateralised and offering MIM holders four cents on the dollar. That first vote failed to meet the 3 billion SPELL quorum and drew accusations of looting the treasury. On 22 October a second vote cut the effective quorum to 300 million SPELL, worth about $26,000, and passed on 396 million votes, of which roughly 296 million came from an address labelled on Etherscan as the MIM Treasury. The proposal did not address nearly $9 million of unexplained outflows in June and July, nor whether about $3 million of WETH recently accumulated by that address counts toward MIM backing.

Future strategy and roadmap: the protocol is in orderly winddown. Remaining collateral goes to MIM holders first, and SPELL is treated as having zero accounting value until all MIM liabilities are settled, so no product roadmap remains. The risks are concentrated: governance has been weakened to the point where a single treasury address with two voters can carry a decision, the Snapshot space admin keys still sit with unreachable former team members and the hard-coded quorum cannot be repaired. Recovery for holders is minimal, and the absence of any account for the outflows leaves the fairness of the winddown itself open to question.

Daniele Sestagalli — Founder; central figure of DeFi "Frog Nation", also founder of Popsicle Finance and Wonderland.

0xMerlin — Co-founder; core Abracadabra developer and multisig signer.

Squirrel — Co-founder; core contributor to Abracadabra and Popsicle Finance.

Protocol is DAO-governed, with MIM minted via a 6-of-10 multisig.

Abracadabra charges a flat 1 USD fee per MIM beam irrespective of the amount bridged, denominated in the gas currency of the chain (ETH on Ethereum mainnet, FTM on Fantom) and booked as treasury revenue.