Blockchain security firm PeckShield published initial details of the exploit at 11:35 UTC Tuesday, adding that the attacker was funded from Tornado Cash, a sanctioned privacy protocol.

Cetrik said that "early indications point to a rounding error being the root cause."

MIM developers said that the Abracadabra DAO will be buying back the stablecoin, which is designed to trade at $1, from the market to preserve the peg. It was trading around $0.94 at press time, per CoinMarketCap.

"We are aware of an exploit involving certain cauldrons on Ethereum," MIM wrote on X. "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."

The stablecoin also fluctuated in 2022 during the collapse of FTX, as a third of MIM's collateral was in FTT, FTX's native token. As FTT crumbled, MIM fell to $0.95 before trading back to parity.

The project came under scrutiny earlier this year after a proposal was made to transition power from the decentralized Abracadabra DAO to a centralized entity with lawyers and trustees.

Stablecoin DeFi DAO Exploit

Oliver Knight

Oliver Knight joined CoinDesk as a news reporter in April 2022. Before joining CoinDesk, Knight was the Chief Reporter at Coin Rivet for three years. Having graduated with a journalism degree from Birmingham City University, Knight went on to work at various sports publications before diving into the world of Bitcoin in 2014. He does not have any crypto holdings.