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 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.
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.
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.
Rough list of Crypto main characters over the years. Add/comment.
✅ still main character
❌ killed off
Mark Karpeles❌
Brock Pierce❌
Charlie Shrem❌
Roger Ver❌
Justin Sun✅
Brad Garlinghouse❌
Dominic Williams❌
Chris Larsen❌
Vitalik Buterin ✅
Dan Larimer❌
Arthur Hayes✅
Charlie Lee❌
Michael Saylor✅
John McAfee❌
Do Kwon❌
Su Zhu❌
Sam Bankman-Fried✅
Changpeng Zhao✅
Charles Hoskinson✅
Andre Cronje❌
Sifu❌
Are we accurate? Feel free to interact with the list and discuss.
Who will be the last man standing? Will a new challenger appear?
Max Keiser✅
Jihan Wu❌
Daniele Sestagelli❌
Arthur Breitman❌
Richard Heart✅
Jed McCaleb❌
Barry Silbert✅
Satoshi Nakamoto❌
Satoshi choice may be controversial but as a main character people have mostly moved on from active discussion so he gets an ❌.
Thoughts are that this is the worst we’ve seen things and we’ve survived several cycles. We speculate there’s a few things at play: global macro crash, Ukraine war, money printing consequences, hyperinflation, Terra collapse, Celsius collapse, and a natural end to a crypto cycle.
Old macro guys think we could possibly have a $2600 S&P, which would obliterate Crypto into a fine mulch and let it evaporate in the sun. Sam et al. are short and profiting from the pop of the bubble and as long as FTX survives by pivoting to stocks, etc. they don’t need Crypto.
Builders around the world are saying home demand has gone down and realtors aren’t selling as much. Gas, food, necessities at ATH.
Where does this go? We don’t know.
There’s no rule that says we won’t break below previous ATH, and we could retrace the literal entire bull run.
This "Dot Collector" program was the straw that broke the camels back. This software must have been the most TOXIC, horrible, oppressive tool that could have ever been used. Employees said "fuck this" and rebelled like Spartacus. THE WORLD NEEDED TO KNOW.
Brian, this was not a "non-event" from your employees POV. You asked them to rate each other in stalin-esque micro-interactions to destroy every last ounce of humanity they had. It would have been kinder to ask them to wear yellow stars in the office.