tl;dr

The potential collapse of Magic Internet Money (MIM) would be bad for crypto markets.

Market Snap (at time of writing)

Market Wrap

Another brutal overnight session for BTC reaching lows not seen since the end of 2020.

As usual, this brings out all the crypto critics trotting out the tired and lazy tropes that BTC is simply a Ponzi scheme used by drug dealers and for other nefarious activities.

Regular readers of the CCC know that is not the case. The likes of Peter Schiff can be safely ignored.

Curious Cryptos’ Commentary – Magic Internet Money (MIM)

MIM is a stablecoin that depegged yesterday morning:

MIM is mostly used in Decentralised Finance (DeFi) operations and is minted by a DeFi platform Abracadabra.

I have used it a couple of times during my unsuccessful involvement in Reserve Treasury Protocols, which turned out mostly to be scams in my experience, but I was always put off by the rather childish name. It felt to me that the people behind MIM were having a laugh.

And it turns out that they were.

The documentation for MIM states that it is “soft-pegged” to the dollar, and that collateral is in the form of crypto assets, which is exactly the wrong type of collateral for a crypto stablecoin.

MIM has a market cap of nearly $2bn. The Terra fiasco that led to UST losing its peg and becoming almost worthless at less than a cent is arguably a key factor in the recent price weakness for all cryptos.

I believe there is a significant risk that MIM suffers the same fate, dealing another body blow to investor confidence. If you do own MIM for any reason, it might be wise to think carefully about the risks of holding it.