Key Highlights:

• Abracadabra Finance suffers a $6.49 million exploit, destabilizing its MIM stablecoin.
• The protocol’s Ethereum cauldrons were drained, leading to MIM’s depegging from the U.S. dollar.

Abracadabra’s Unfortunate Spell Gone Wrong

Yello Paradisers! In what seems like a trick gone awry, Abracadabra Money, a cross-chain lending platform, faced a $6.49 million exploit. The platform’s Ethereum cauldrons, which allow users to borrow the Magic Internet Money (MIM) stablecoin using various assets as collateral, were the focal point of this financial sleight of hand.

MIM Development Team’s Response

The MIM team, while probably not waving magic wands, acknowledged the exploit and is currently investigating. They plan to compensate victims through a buy-back and burn process, a strategy that might need more than a rabbit in a hat to stabilize the situation.

PeckShield Flags the Exploit

Blockchain security firm PeckShield was the first to spot the exploit, noting that the attacker initiated their magical heist with just one Ether, funded through the cryptocurrency mixer Tornado Cash. Talk about starting small and dreaming big!

MIM’s Rollercoaster Ride

Following the exploit announcement, MIM, an algorithmic U.S. dollar-pegged stablecoin, took a nosedive from its dollar peg, plummeting to $0.77. However, like a good magician, it made a partial comeback, floating back up to $0.94, as per CoinMarketCap data.

The Exploit Mechanics

CertiK, another blockchain security firm, suspects a “rounding issue” might have been the culprit. The attacker cleverly manipulated the “userBorrowPart()” and “repay()” functions in the protocol’s v4 cauldrons, borrowing and repaying loans repeatedly to drain funds from the contract. It’s like pulling a coin from behind the ear, but on a much larger scale.

MIM’s Previous Depegging Drama

This isn’t MIM’s first time losing its footing. The stablecoin previously depegged in 2022 due to the Terra Luna ecosystem collapse. In a bid to manage risks from the Curve protocol, Abracadabra raised the interest rate on MIM by a whopping 200% last August.

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