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Black Thursday at DeFi Saver (covering recent events and plans for updates)

Black Thursday at DeFi Saver

On Thursday, March 12 2019, the Ethereum market experienced its worst day in history, crashing from $194.97 at 1am to $136 (-30%) in the next 12h and eventually finding bottom at $95.87 (-51%) some 26h later. A quick recovery to $130 followed from there, but the damage had already been done.

As ETH price plummeted, it caused a cascading effect in the world of decentralized finance, but most notably in MakerDAO, by far the most popular DeFi protocol, but also one with the largest liquidation penalties.

Events in the MakerDAO protocol in connection to ETH price. Source: defiexplore.com/stats

Prior to the crash, our CDP Automation system managed 280 unique MakerDAO positions with over 77k ETH collateral within them. Some of these funds were unfortunately not successfully protected from liquidation throughout the crash and we wanted to share details on the circumstances this happened.

Network congestion

Although network congestion caused great problems for Automation when it was initially introduced, this was not the case this time. The system adjusted correctly and automated Repay transactions were going through without any issues. For most of the day, this meant running transactions at 200 Gwei, which resulted in over 300 ETH burned for gas that day once our reserves of GasToken depleted.

As a reminder, Automation users are charged for a max of 40 Gwei per transaction, with everything above that covered by us. This is a hardcoded limit in Automation.

Price updates in MakerDAO MCD

The way price updates work in Multi-collateral Dai is by taking a median value from those provided by multiple approved oracles and scheduling this value to be fed into the protocol as the current price after a 1h delay. This is something we wrote more about here.

There are good and bad sides to this in terms of Automation. The good side is that a price update leaves a full hour window for all needed adju...

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