How is MIM created?

MIM is a collateral-backed stablecoin created by Abracadbra. Its value is pegged to the USD and kept stable through an economic system of aligned financial incentives. MIM is minted when users borrow against locked collateral and burned when debt is repaid.

What is MIM used for?

MIM is a price-stable asset that is mostly used as a hedge against volatility as it maintains a stable value of around 1 USD. Users need an alternative store of value and medium of exchange to navigate the highly volatile crypto markets. MIM addresses this problem for crypto native users, as well as enables a wide range of financial activities including hedging during periods of high market volatility, market making against a stable asset, and use as collateral for leveraging.

How is the price of MIM kept stable?

MIM is an asset-backed currency that maintains a free-floating peg to the USD. This means that its value may differ from exactly 1 USD from time to time given current market conditions. MIM follows the DAI overcollateralization model to maintain its peg via a combination of external market forces, internal economic incentives, and policy tools controlled by SPELL token holders. The different market actors all acting in self-interest, work in concert to maintain MIM's stability. Borrowing fees are one policy tool that is used to manage the circulating supply of MIM. Decreasing the borrowing fee helps incentivize the minting of additional MIM, while increasing the borrowing fee has the opposite effect of reducing the rate of MIM creation. Vault owners also play an important role in maintaining the peg by minting MIM when spikes in demand push its price above 1 USD, and conversely purchasing MIM to pay down their debt at a discount when it trades below 1 USD. Lastly, arbitragers contribute to maintaining the MIM peg by taking advantage of price differences across various market makers.