MIM + Its Peg

    MIM is a USD stablecoin minted by the Abracadabra.money decentralized platform. Abracadabra uses interest-bearing tokens as collateral to mint MIM. Interest-bearing tokens that can currently be used as collateral include liquidity provider (LP) tokens from Convex, Curve, Yearn, among others. MIM is an ERC-20 token that is soft-pegged to USD, meaning the exchange rate is mostly determined by market forces. MIM remains pegged via arbitrage incentives within the Abracadabra ecosystem. When MIM is trading below USD1.00, arbitrageurs are incentivized to buy MIM at a discounted price, and potentially pay off some of their debt at a cheaper price than if MIM were USD1.00. If MIM is trading above USD1.00, arbitrageurs are incentivized to borrow more MIM and sell it at a premium.

    How has MIM performed at holding/regaining its peg over the past few weeks?

    The difference between the MIM price and the USD as a percentage is shown in table below since January 1st 2022.

    It usually fluctuates between -1% and 1%, being able to return to a 0% deviation within an hourly frame, which indicates the market is able to absorb the arbitrage incentives rapidly.

    There is though a bigger deviation of -2.86% on January 27th for which the arbitrage incentives were not strong enough to return below -1% in almost 36h.

    Is MIM depegging correlated with the price of other stablecoins, especially UST?

    When comparing MIM with other Stablecoins, one can differentiate between UST and the top stablecoins by market cap, USDT and USDC.

    The latter have a very stable behaviour, fluctuating almost always between -0.5% and 0.5%.

    Compared to UST, where the fluctuation goes from -3% to 1.5%, the behaviour is similar for MIM and UST. This may be due to the bigger arbitrage opportunities compared to the bigger market cap stablecoins.

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