Abracadabra DAO has opened a governance vote on shutting down its decentralized finance protocol and liquidating the Magic Internet Money stablecoin. The move follows the accumulation of roughly $21 million in bad debt, leaving the protocol with an estimated $900,000 in recoverable collateral.

Under current estimates, the enforceable backing equates to less than $0.04 per MIM token. More than 95 percent of the stablecoin’s liabilities lack collateral support, creating a shortfall of approximately 96 percent for holders relative to face value.

Details of the Liquidation Proposal

The proposal calls for liquidating Abracadabra’s remaining assets, recovering collateral from its Cauldrons, converting those assets into Ether, and distributing the proceeds proportionally among MIM holders. Holders would initially receive about $0.04 for each dollar of face value based on the present collateral estimate.

Approximately 22 million MIM tokens circulate outside protocol addresses. MIM functions as a collateralized-debt-position stablecoin, so its outstanding supply represents protocol debt. Claims by MIM holders rank ahead of the SPELL governance token. SPELL would hold no accounting value until all MIM liabilities are repaid.

If approved, the protocol would cease operations after the liquidation process. Positions held in contracts that cannot be modified would remain available for users to exit on-chain.

Background of Losses and Peg Failure

Abracadabra has incurred more than $21 million in losses stemming from multiple vulnerabilities. MIM experienced a severe departure from its dollar peg in June, and the protocol now lacks a viable path to restore full collateralization.

A Snapshot vote will decide whether the shutdown and liquidation plan proceeds. Passage would formally initiate the recovery of collateral, conversion into Ether, and proportional distribution to MIM holders.

The governance process remains open as the community considers the proposal to wind down the protocol.