MakerDAO gets stress tested as ETH price plummets
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Re: MakerDAO gets stress tested as ETH price plummets
#2Given that this was a black swan event and the actual damage is minimal, DeFi has proven to be extremely durable.
Re: MakerDAO gets stress tested as ETH price plummets
#3Given that this was a black swan event and the actual damage is minimal, DeFi has proven to be extremely durable.
Minimal? My understanding is someone was able to pull ETH out at near zero DAI. Nothing the contract didn't allow, but unforseen use of it which caused some people who had invested that ETH to essentially lose their life savings!
Re: MakerDAO gets stress tested as ETH price plummets
#4Given that this was a black swan event and the actual damage is minimal, DeFi has proven to be extremely durable.
Minimal? My understanding is someone was able to pull ETH out at near zero DAI. Nothing the contract didn't allow, but unforseen use of it which caused some people who had invested that ETH to essentially lose their life savings!
If there really are people that literally put their entire life savings into a single, unproven vessel then they almost certainly did so because they were gambling it would make them (an order of magnitude+) more money than a more reliable stable alternative. They won’t find much pity.
Re: MakerDAO gets stress tested as ETH price plummets
#5Given that this was a black swan event and the actual damage is minimal, DeFi has proven to be extremely durable.
Minimal? My understanding is someone was able to pull ETH out at near zero DAI. Nothing the contract didn't allow, but unforseen use of it which caused some people who had invested that ETH to essentially lose their life savings!
It's more complicated. Their collateral ratio has dropped below the liquidation level of 150%. So at best they would only get a fraction of their collateral back (any liquidation has a discount and a 13% penalty) - fundamentally they lost because their speculative bet didn't pay off. So yes, they lost more than they should, but describing it like they lost everything because of the liquidation problem alone is misleading.
The "attack" was trivial in that there was only one bid at an auction - not enough people liquidating undercollateralized positions, but now so many people are looking at this it's never going to repeat again. It's an obvious risk only in hindsight.
Re: MakerDAO gets stress tested as ETH price plummets
#6Given that this was a black swan event and the actual damage is minimal, DeFi has proven to be extremely durable.
Black swans happen once a decade or so: dotcom bust, 9/11, GFC, now coronavirus. If the crypto can't deal with it, it's not much of an investment or a store of value.
Re: MakerDAO gets stress tested as ETH price plummets
#7Earlier quoted context omitted.
Minimal? My understanding is someone was able to pull ETH out at near zero DAI. Nothing the contract didn't allow, but unforseen use of it which caused some people who had invested that ETH to essentially lose their life savings!
If there really are people that literally put their entire life savings into a single, unproven vessel then they almost certainly did so because they were gambling it would make them (an order of magnitude+) more money than a more reliable stable alternative. They won’t find much pity.
I work in the crypto industry and I think this a failure of our community to properly inform people of the risks.
These people weren't gambling for massive returns. They thought it would be a safe way of getting pretty good ones.
Re: MakerDAO gets stress tested as ETH price plummets
#8Earlier quoted context omitted.
If there really are people that literally put their entire life savings into a single, unproven vessel then they almost certainly did so because they were gambling it would make them (an order of magnitude+) more money than a more reliable stable alternative. They won’t find much pity.
I work in the crypto industry and I think this a failure of our community to properly inform people of the risks. These people weren't gambling for massive returns. They thought it would be a safe way of getting pretty good ones.
Really?
I've never seen a hive of more rampant unchecked greed.
Re: MakerDAO gets stress tested as ETH price plummets
#9Earlier quoted context omitted.
I work in the crypto industry and I think this a failure of our community to properly inform people of the risks. These people weren't gambling for massive returns. They thought it would be a safe way of getting pretty good ones.
Really? I've never seen a hive of more rampant unchecked greed.
You mean r/WallStreetBets and how they play with options in the traditional market?
Don’t clutch your pearls too hard - greed is everywhere, not just crypto.
Re: MakerDAO gets stress tested as ETH price plummets
#10Earlier quoted context omitted.
Minimal? My understanding is someone was able to pull ETH out at near zero DAI. Nothing the contract didn't allow, but unforseen use of it which caused some people who had invested that ETH to essentially lose their life savings!
It's more complicated. Their collateral ratio has dropped below the liquidation level of 150%. So at best they would only get a fraction of their collateral back (any liquidation has a discount and a 13% penalty) - fundamentally they lost because their speculative bet didn't pay off. So yes, they lost more than they should, but describing it like they lost everything because of the liquidation problem alone is mislea…
Market makers face this potential problem every day in the real world. They get sophisticated about it or die.