MIM Peg Disrupted Following 6.5 Million dollars Exploit on Abracadabra’s Ethereum Cauldrons

Crypto News– On Tuesday, the decentralized crypto lending platform Abracadabra.money fell victim to an exploit, resulting in a loss of $6.5 million to the protocol.

MIM Peg Disrupted Following 6.5 Million dollars Exploit on Abracadabra’s Ethereum Cauldrons

Blockchain security firm PeckShield identified the exploit, revealing that the attacker initiated it with 1 ETH from Tornado Cash. Following the attack, the stablecoin tied to the protocol, Magic Internet Money (MIM), experienced a flash crash to $0.76. As of the latest update, MIM was still trading below its U.S. dollar peg at approximately $0.98.

The attacker exploited certain isolated lending pools on Ethereum within Abracadabra, known as “cauldrons,” by utilizing a series of nested smart contracts to manipulate the “borrow” and “repay” functions of Abracadabra Degenbox, as analyzed by Arkham. CertiK, another blockchain security firm, suggested that a “rounding error” might have been the underlying cause of the exploit.

The MIM team acknowledged the exploit and disclosed that the protocol’s decentralized autonomous organization (DAO) was implementing a buyback and burn program to stabilize the stablecoin’s price, which could explain the recent recovery towards its peg.

Approximately 10 hours later, the team issued an update advising users to revoke all approvals to the smart contract to prevent further loss of funds. This incident isn’t the first time MIM has lost its peg; it previously dropped to $0.95 following the collapse of FTX in November 2022, attributed to FTX’s native token FTT being the primary collateral token. MIM also experienced destabilization after the Terra ecosystem’s collapse earlier that year.