Liquidity is a sensitive issue in the current market, making many depeg tokens. Stablecoin MIM the newest name to join the depeg list this time around. The reason why project Abracadabra (SPELL) lost its peg was due to rumors of bad debt.
Stablecoin MIM depeg
At around 7 a.m. on July 18, stablecoin MIM started trending away from the $1 zone. Accordingly, at the time of writing, this stablecoin is continuing to fall deeply to the $ 0.94 mark.
Twitter account Autism Capital said that in the last month, when Terra exploded, 12 million USD of bad debt was formed when UST could not be quickly liquidated on-chain. However, this information was little noticed by many people, simply because the main light focused too much on Terra at that time.
On March 25, 2022, in an image of the mortgaged assets dashboard – minting MIM, it is easy to see that ~64% of MIM’s collateral is in UST. However, the SPELL team said that the dashboard was “incorrect data” and that the team was “under maintenance”. Accordingly, on the project’s homepage, users cannot access this data sheet at the present time.
Founder of this stablecoin, Sesta (who was famous after collaborating “going underground” with 0xSifu) even mocked the rumors surrounding his bad debt. At the same time, some pictures suggest that Dani Sesta also mortgaged SPELL and borrowed more MIM only to be liquidated later.
Specifically, if the bad debt described above occurs, there will be an unsecured amount of MIM stablecoins on the market.
MIM is developed in the form of collateral to be able to mint this stablecoin. For ease of comparison, this is the same model as MakerDAO’s DAI.
However, to ensure that the number of stablecoins on the market is always secured, the mechanism will have a level of liquidation. In a nutshell, when the asset value falls below this mark, the liquidation bots will take the user’s loan, return the MIM, and take back the position’s collateral. Attached to that, these liquidation bots will also receive an additional bonus.
In SPELL’s case, because UST fell so quickly, the liquidation bot didn’t work effectively to keep up with the plunge, resulting in a large amount of MIM out of the market with no collateral to secure. tell.
In the past, Maker has also encountered this problem. Accordingly, because the Ethereum infrastructure was too slow to process transactions and the entire market price plummeted at that time, MakerDAO had to bear a bad debt.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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Stablecoin MIM Depeg After Rumors Of “Bad Debt”
Liquidity is a sensitive issue in the current market, making many depeg tokens. Stablecoin MIM the newest name to join the depeg list this time around. The reason why project Abracadabra (SPELL) lost its peg was due to rumors of bad debt.
Stablecoin MIM depeg
At around 7 a.m. on July 18, stablecoin MIM started trending away from the $1 zone. Accordingly, at the time of writing, this stablecoin is continuing to fall deeply to the $ 0.94 mark.
Twitter account Autism Capital said that in the last month, when Terra exploded, 12 million USD of bad debt was formed when UST could not be quickly liquidated on-chain. However, this information was little noticed by many people, simply because the main light focused too much on Terra at that time.
On March 25, 2022, in an image of the mortgaged assets dashboard – minting MIM, it is easy to see that ~64% of MIM’s collateral is in UST. However, the SPELL team said that the dashboard was “incorrect data” and that the team was “under maintenance”. Accordingly, on the project’s homepage, users cannot access this data sheet at the present time.
Founder of this stablecoin, Sesta (who was famous after collaborating “going underground” with 0xSifu) even mocked the rumors surrounding his bad debt. At the same time, some pictures suggest that Dani Sesta also mortgaged SPELL and borrowed more MIM only to be liquidated later.
Specifically, if the bad debt described above occurs, there will be an unsecured amount of MIM stablecoins on the market.
MIM is developed in the form of collateral to be able to mint this stablecoin. For ease of comparison, this is the same model as MakerDAO’s DAI.
However, to ensure that the number of stablecoins on the market is always secured, the mechanism will have a level of liquidation. In a nutshell, when the asset value falls below this mark, the liquidation bots will take the user’s loan, return the MIM, and take back the position’s collateral. Attached to that, these liquidation bots will also receive an additional bonus.
In SPELL’s case, because UST fell so quickly, the liquidation bot didn’t work effectively to keep up with the plunge, resulting in a large amount of MIM out of the market with no collateral to secure. tell.
In the past, Maker has also encountered this problem. Accordingly, because the Ethereum infrastructure was too slow to process transactions and the entire market price plummeted at that time, MakerDAO had to bear a bad debt.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
Join CoinCu Telegram to keep track of news: https://t.me/coincunews
Follow CoinCu Youtube Channel | Follow CoinCu Facebook page
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