The organization stated that the attack was funded using Tornado Cash.
Early signs indicate a rounding error being the primary reason as per CertiK.
Decentralized platform Abracadabra.money’s stablecoin, MIM, had a precipitous decline to $0.76 after news of a $6.5 million vulnerability. Initial details of the hack were revealed by blockchain security company PeckShield at 11:35 UTC Tuesday. The organization went on to say that the attack was funded using Tornado Cash, a sanctioned privacy crypto mixer.
MIM team stated:
“We are aware of an exploit involving certain cauldrons on Ethereum. Our engineering team is triaging and investigating the situation. To the best of its Ability, the DAO treasury will be buying back MIM from the market to then burn. More updates are coming.”
Buying Back MIM from the Market
According to Certik, early signs indicate a rounding error being the primary reason. In order to maintain the peg, the Abracadabra DAO, according to the MIM developers, will be purchasing the stablecoin back from the market. The stablecoin is supposed to trade at $1. At the time of publication, it was selling at around $0.96 as per data from CoinGecko.
A third of MIM’s collateral was in FTT, the native token of FTX, hence the stablecoin also swung in 2022 when FTX collapsed. During the downturn of FTT, MIM dropped to $0.95 before regaining its intended value of $1.
This project has been under fire since early this year for a plan to consolidate the Abracadabra DAO’s decentralized authority into a single body staffed by attorneys and trustees. To mitigate risk associated with the Curve protocol, the protocol raised the interest rate on the currency by 200% in August.