Thread by @AutismCapital

We have a scoop from one of our associate autists: MIM (Magic Internet Money) may be nearly insolvent. MIM is one of the larger stablecoins, with a market cap of ~$300M.

We can't believe that a project called Magic Internet Money has been acting irresponsibly either.

Details:

Last month during the Terra blowup, $12M of bad debt was created by Abracadabra (the protocol behind MIM) because liquidations couldn't happen fast enough to cover the protocol's MIM liabilities. This news was swept under the rug.

Abracadabra immediately took down their analytics dashboard so they could "upgrade" it.

The Abra team assured our autist that timing of their analytics dashboard going down was a total coincidence.

Instead of paying back the bad debt out of the MIM treasury the MIM core team decided to YOLO market buy $CRV instead.

The price of CRV has been plummeting and with the dashboard down there's no easy way of actually verifying how
much bad debt is in the protocol at this point.

A couple days ago, the founder of MIM, Dani, created even *more* bad debt by letting his SPELL position get liquidated:

It’s been five days since Dani’s bad debt was created. This is a screenshot of him saying in the MIM discord that the idea he wouldn’t put his debt is funny.

It still hasn’t been paid yet.

Twitter servers are boned. This didn’t send properly. We’re sorry.

We’re concerned that the protocol could become insolvent, either through the MIM treasury continuing to dump in value or more bad debt created.

At that point, the rational thing to do for any MIM holder is to dump it, as the last person holding the bag would get nothing back.

A napkin example:

>5 guys
>Andy locks up 1000 ETH and borrows 100k MIM
>Ben locks up 100 BTC and borrows 100k MIM
>Carl locks up 100k USDC and borrows 80k MIM
>Sam locks up 1M SPELL and borrows 50k MIM, sells it for USDT to Pleb

Total MIM = 330K

>SPELL goes under and liquidation doesn't happen
> 50k MIM is now unbacked
> Andy, Ben and Carl pay back their loans and get back their collateral
>Pleb is left with 50k MIM and no collateral backing it.
>Completely rekt.

It’s worth noting that this morning Wonderland took out $50M and moved it to USDC. etherscan.io/tx/0xeb39fe412…

It's also worth remembering that Wonderland was the project run by Sifu, the co-founder of QuadrigaCX. Wonderland and Abracadabra used to be much more linked. They have claimed to split ties yet Sifu is still very active in the Abracadabra Discord.

bsc.news/post/abracadab…

TLDR: If you’re holding MIM consider doing your own DD and treading carefully.

We’re concerned that the protocol could become insolvent, either through the MIM treasury continuing to dump in value or more bad debt created.

At that point the rational thing to do for any MIM holder is to dump it, as the last person holding the bag would get nothing back.

A napkin example:

>5 guys
>Andy locks up 1000 ETH and borrows 100k MIM
>Ben locks up 100 BTC and borrows 100k MIM
>Carl locks up 100k USDC and borrows 80k MIM
>Sam locks up 1M SPELL and borrows 50k MIM, sells it for USDT to Pleb

Total MIM = 330K

>SPELL goes under and liquidation doesn't happen
> 50k MIM is now unbacked
> Andy, Ben and Carl pay back their loans and get back their collateral
>Pleb is left with 50k MIM and no collateral backing it.
>Completely rekt.

It’s worth noting that this morning Wonderland took out $50M and moved it to USDC.

etherscan.io/tx/0xeb39fe412…

It’s also worth remembering that Wonderland was the project run by Sifu, the co-founder of QuadrigaCX. Wonderland and Abracadabra used to be much more linked. They have claimed to split ties yet Sifu is still very much active in the Abracadabra discord.

bsc.news/post/abracadab…

TLDR: If you’re holding MIM consider doing your own DD and treading carefully.

“Is small and I should def pay it. Good night folks.”