Abracadabra, the developer of the Magic Internet Money (MIM) stablecoin, has put forward a Snapshot governance proposal that would liquidate the protocol. MIM holders would receive roughly four cents for every dollar of their claims.

According to The Defiant, which reported the proposal, Abracadabra's team estimates recoverable backing of about $900,000 against $21 million in bad debt — an implied recovery rate near 4.3%. The team would swap whatever collateral sits in the protocol's vaults into ether and pay MIM holders on a pro rata basis.

What does the proposal actually do?

The Snapshot vote asks MIM holders to approve a full wind-down. The mechanism runs in three steps:

• Liquidate remaining collateral
• Convert the proceeds into ether
• Distribute that ether to MIM addresses proportionally to their balances

The proposal rules out recapitalization or any path back to the dollar peg.

How binding is a Snapshot result?

MIM holders would vote through Snapshot, the off-chain gas-free platform common to DeFi governance. Snapshot tallies preferences by wallet signature rather than on-chain transactions. The result lacks automatic smart-contract enforcement.

The protocol's multisig signers would still need to manually execute the collateral swap and the pro rata distribution once voting closes. No execution deadline accompanies the proposal. The team has not named a date by which it would begin the wind-down if holders approve it.

What happens to other Abracadabra tokens?

The proposal allocates nothing to SPELL, Abracadabra's secondary token, or to governance-token holders. By directing residual value to MIM holders alone, the structure subordinates every other token class to zero recovery.

That hierarchy mirrors how the protocol's claims ranked during normal operation, when MIM sat at the front of any payout queue.

How does the recovery math work?

The $900,000 recoverable figure divided by $21 million in MIM liabilities yields the four-cents-on-the-dollar headline rate. Anything MIM holders ultimately collect comes from that $900,000 pool, plus any future proceeds from the run-off of remaining debt positions the protocol still holds.

How did Abracadabra get here?

The Defiant framed the proposal as a settlement rather than a restructuring. MIM launched as an algorithmic stablecoin targeted at the U.S. dollar. The Abracadabra protocol supported leveraged borrowing against various forms of crypto collateral.

As the protocol's leveraged positions accumulated losses, MIM lost its peg, leaving the bad-debt overhang that the Snapshot vote now tries to resolve.

What happens next?

The Snapshot vote is the gating event. Approval triggers a defined run-off — collateral swap to ETH, then pro rata distribution. Rejection forces the team to publish an alternative plan, since the proposal explicitly assumes recapitalization is off the table.

The outcome will determine whether Abracadabra becomes a clean template for handling undercollateralized DeFi wind-downs, or a drawn-out one — and whether the multisig executes the payout within days of the vote closing or stretches the run-off indefinitely.