For those unfamiliar, Black Thursday was a historical event for the DeFi ecosystem as a sudden price crash in ETH (due to Coronavirus fears) triggered the liquidation auction of multiple under-collateralized Vaults. While the system didn’t necessarily malfunction, the severe volatility allowed a few individuals (Keepers) to win collateral auctions at extremely low value and in some instances, $0.
With that, Maker received some negativity from the DeFi community as the Keeper system performed inefficiently, largely due to the inaccessibility of the software and the few amount of active Keepers in the system.
Our post covering the events of the Black Thursday market crash is now live and includes details on what took place as well as a brief introduction to planned Automation updates.
We welcome all feedback and comments, be it here or in our Discord.https://t.co/X9FejPQSbg
— DeFi Saver (@DeFiSaver) March 18, 2020
Up until today, the only way to participate in the system was to set up a Keeper bot – a technical feat requiring users to set up an automated script to participate in the auctions on your behalf.
Now, DeFi Saver released a new dashboard to help boost the effectiveness of Maker’s Keeper liquidation system.
We are very glad to share our simple to use @MakerDAO collateral liquidations dashboard that we've been working on since Black Thursday.🎉
Anyone can now participate in liquidated collateral auctions.
More info in our short introduction post below.👇https://t.co/V4EI5knJF1
— DeFi Saver (@DeFiSaver) March 25, 2020
Introducing DeFi Saver’s MakerDAO Keeper Dashboard
With DeFi Saver’s liquidation dashboard, any user can now participate in collateral auctions simply by loading a page and connecting a web3 wallet like MetaMask, Coinbase Wallet or Fortmatic. DeFi Saver has been known as an asset management platform focused on Maker implementations, offering users a range of new CDP management strategies and more. The new dashboard continues down this path as a Maker-focused asset management tool.
The introduction of the Keeper dashboard now democratizes the ability for the DeFi community become Keepers and capitalize on the arbitrage opportunities it holds. Creating accessible software to run Keeper bots is ultimately an important piece to the long-term stability of the Maker system. As we saw – without them, the system fails.
Users can view on-going auctions by visiting the liquidations page and participate in any open auctions with a click of a button.
A Background on Collateral Auctions
Liquidated collateral auctions occur in two phases – the first is called “tend”. In the first phase, participants bid for the amount of the debt they can or want to cover. If 100% of the debt cannot be covered by Keepers, they can bid less which would kick off the second phase if no higher bid happens. If the bid is 100% of the debt, the second phase begins immediately.
The second phase is where participants bid for the actual ETH (or BAT or USDC) collateral. The amount of DAI paid for the collateral was set in the first phase and now the auction is in terms of “how much collateral will be won”. That in mind, the caveat is that users bidding in the second phase are bidding for how little ETH you’re okay with winning where each next bid must be >3% smaller than the previous to be accepted.
While this may be somewhat confusing, DeFi Saver streamlines these complexities for most users. If users join in Phase 1, they can now bid DAI to cover the debt left in liquidation. If users are joining phase 2, they can bid on the amount of ETH they want to win with the amount of DAI set in Phase 1.
As it stands today with the Maker protocol, all collateral auctions last for 6 hours where whoever has the smallest bid at the end of Phase 2 wins the amount of collateral and the auction concludes.
In light of Black Thursday, it’s great to see DeFi projects look to help strengthen the MakerDAO ecosystem rather than continue to tear it down. The introduction of DeFi Saver’s simple Keeper Dashboard will allow a significantly higher amount of participation among the community, effectively making the Maker system more robust and efficient in times of high volatility (and liquidations).
With the new liquidation dashboard, we could expect the DeFi Saver team to expand its capabilities in the future into other forms of MakerDAO auctions – notably the Dai Surplus auctions and MKR auctions for protocol recapitalization.
For anyone interested in using DeFi Saver’s Collateral Liquidation Dashboard, you can do so here and begin participating in MakerDAO auctions.
To stay up to date with the team, follow them on Twitter.
Bonus: DeFi Saver has also launched their Gitcoin Grant Round 5 page. If you find the new liquidation dashboard valuable, make sure to support the team by donating as little as 1 DAI for their efforts (it goes a long way)!
The @Gitcoin CLR Matching round #5 is now live and we would greatly appreciate everyone who considers donating to DeFi Saver.
All donations made at https://t.co/tLPFJhkB97 will be used to further accelerate development.💪
A 1 DAI contribution could be matched 100x❕
— DeFi Saver (@DeFiSaver) March 23, 2020
Analyst at Bankless – one of the leading resources for open finance. Lucas is an active contributor to the DeFi ecosystem with appearances in other notable DeFi outlets including The Defiant and Our Network. He has years of experience working with dozens blockchain and token startups where he focused on token economics, marketing, and growth.