Crypto Crash: Maker DAO intervenes to stabilize DeFi
Crypto Crash: Maker DAO intervenes to stabilize DeFi
Defi

Crypto Crash: Maker DAO intervenes to stabilize DeFi

By Alfredo de Candia - 13 Mar 2020

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As we have been witnessing in the last few hours, the whole crypto market is losing incredible figures: a real crypto crash and this has mobilized some companies including Maker DAO.

In fact, when the price of an asset reaches a threshold too low, some platforms that use automated processes close their positions. Think, for example, of what happens with stablecoin DAI collateralisation.

And in fact yesterday some so-called Keepers managed to close positions with 0 Dai for 50 ETH of collateral.

So, a few hours ago Maker DAO announced that, to counter the incredible loss of value of Ethereum (ETH), with the congestion of its network and the increase in gas prices, the Maker Foundation has decided to vote today to adjust some parameters so that this can no longer happen.

With the sudden crypto crash of ETH, the oracles used by Maker DAO to monitor the price moved too slowly, which allowed the Maker vault to be over-collateralized and then add more collateral before the price went to close the position, but not everyone was able to do this and in fact the complaints on Reddit are several.

A vote will therefore take place today – currently still in progress – to modify some parameters of the protocol, so that such a situation cannot be repeated in the future. It will be necessary to reach over 62 thousand MKR to modify the protocols.

In Maker’s whitepaper it was already written that the protocol could create and sell MKR to re-collateralize the system.

Luckily it was avoided to use the emergency shutdown in the MCD (Multi-Collateral Dai) that allows to force the reference price, which is 1 dollar and protect in this way all the actors of this system, from the users of the stablecoin to the protocol itself. 

This procedure could have always been initiated by a vote reaching at least 50 thousand MKR.

Alfredo de Candia
Alfredo de Candia

Android developer for over 8 years with a dozen of developed apps, Alfredo at age 21 has climbed Mount Fuji following the saying: "He who climbs Mount Fuji once in his life is a wise man, who climbs him twice is a Crazy". Among his app we find a Japanese database, a spam and virus database, the most complete database on Anime and Manga series birthdays and a shitcoin database. Sunday Miner, Alfredo has a passion for crypto and is a fan of EOS.

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