The decline in Ethereum prices in recent days indicates the high dependence and weakness of MakerDAO, DAI and the DeFi ecosystem built on it.
DeFi Saver is a one-stop project designed to become a one-stop service for DeFi. Due to problems with the Ethereum network, the project failed to advance some of its processes. Since the gaming game occupies 59% of the gas , the Ethereum network is still so crowded that it is impossible to trade for DeFi Saver's smart contracts.
- QKL123 market analysis | For the central bank digital currency, what is the country's intention? (1115)
- China Blockchain Enterprise Development Census Report: About 1,000 businesses that have actually conducted business
- On November 7th, the most mysterious dinner in Wuzhen came | Guide to the blockchain conference
- Opinion: "Patent thinking" may destroy China's blockchain industry, and open source is the trend
- Gao Jian, former executive vice president of China Development Bank: Blockchain is hot, but contains many elements of a future bubble
- What does the grayscale SEC registration application mean for the encryption industry if it is approved?
In addition to technical difficulties, DeFi Saver also announced that its financial business was affected by the decline in Ethereum prices. Yesterday, Ethereum fell more than 18% in less than two hours, from $190 to $155. The decentralized stable currency DAI secured by Ethereum remains linked to the US dollar. As of press time, the Ethereum price was $168.
DeFi Saver enables simpler interaction with the two largest DeFi services, Compound and MakerDAO. DeFi Saver also allows investment in dydx decentralized exchanges and Fulcrum. Its apps and wallets can connect to decentralized exchanges, provide DAI liquidity, and track multiple DeFi and cryptocurrency lending portfolios.
DeFi Saver announced in a tweet on September 24 that due to the severe congestion in the Ethereum network, the system “difficult to implement all CDP (mortgage debt) ratio adjustments required in a timely manner”.
CDP is a type of lending managed by smart contracts that is critical to the operation of DAI stable coins and can be used to generate DAI.
Although MakerDAO plans to increase support for other assets , so far, only Ethereum is the collateral available to open CDP.
CDP can be used to create a DAI, and the collateral will remain locked until the DAI is returned. DeFi Saver explained in another tweet: "The MakerDAO has a mechanism that will automatically be liquidated once the CDP guarantee ratio drops below 150%." After the Ethereum plummeted, the total DAI suddenly decreased from around 89 million. Up to 80 million, as of press time, about 76.64 million.
The company also offers a service to prevent MakerDAO's CDP from being automatically cleared. DeFi Saver automatically monitors the clearing process. However, due to network congestion, the monitoring mechanism failed, resulting in multiple liquidation. The company acknowledged that it “failed to prevent two of the CDPs from being liquidated.”
However, the company announced that it intends to compensate the two affected users and added:
“Although our automatic protection is still in the testing stage, we are saddened by the disappointment of some users. We are willing to make up for the loss.”
On the other hand, the company also pointed out that "in the recent price crash, the system automatically protected 20 CDPs."
DeFi Saver also said that it has adjusted the system according to the current transaction fee, and the current automation protection function is working properly.
Andreas Antonopoulos, author of "Better Bitcoin," commented on this phenomenon. Some users believe that this situation proves that the DeFi ecosystem is not working properly. Antonopoulos responded by saying:
"Not necessarily. DAI seems to remain tied to the US dollar. Except for two of the CDPs, the protection contract is valid in all other cases. This is a good test and everything goes well."