/biz/ - Business & Finance

>>17876335
why?

>>17876345
Colleralisation falls below 150% if the price of eth falls another 30%. That triggers automatic liquidation of vaults. The auctions are bought by holders of DAI who will then market sell the ETH to buy more DAI to bid on more auctions. It's similar to the cascading liquidations that happened with bitmex recently.

>>17876376
vibranium support at $85

>>17876335
that's less than 2% of circulating supply

So if I'm understanding correctly. Price falls, so the eth locked in the smart contract to mint the dai is liquidated. The liquidated eth goes into an auction and there is then mass ETH on the market for sale?

>>17876376
should I be in auctions then?

>>17876473
>that's less than 2% of circulating supply
if market sold it will destroy orderbooks, and draw in other selling, it's enough to crash the whole market fren
>>17876475
yes

1. Falling eth prices cause vault liquidations
2. Those liquidations are sold at auction that only people with fat stacks of DAI can bid on.
3. They buy lots of 500 ETH at auction
4. They sell it on the market
5. They buy more DAI
6. They purchase more liquidated vaults
7. Goto 4

Typically these vaults are purchased significantly below cost due to the ongoing liquidity crunch for DAI.

Basically significant market sales of ETH cause prices to fall more which causes more liquidations in a positive feedback loop.

Without a circuitbreaker this will drive prices to 0.

>>17876570
uh ohhhhh

>>17876517
>should I be in auctions then?
If you have enough DAI to bid on lots of 500 ETH you probably should. The flipper auction contract lives here: https://etherscan.io/address/0xd8a04f5412223f513dc55f839574430f5ec15531

You need to join it via the vat joiner contract here:
https://etherscan.io/address/0x9759a6ac90977b93b58547b4a71c78317f391a28

There's no proper user interface because the makers of MakerDAO are retards. I can give you some basic advice on how to execute the right sequence of transactions to view and join auctions if you have enough DAI that you want to try bid

>>17876570
But if all that ETH is being liquidated, isn't thr DAI that was issued from those CDPs being burnt as well as a result of liquidation?

>>17876570
>if market sold
it will move like 40 dollars maybe
but that doesn't make any sense because MakerDAO auctions usually don't trade more than 20% below market price

>>17876666
check'd
>But if all that ETH is being liquidated, isn't thr DAI that was issued from those CDPs being burnt as well as a result of liquidation?
No that's not how it works. The DAI minted by the creation of the vault is out in the ecosystem already (e.g. sold, passed on, locked up in other contracts etc.) it can't be clawed back involuntarily. That's why the auction happens. You bid DAI for the ETH (the liquidated vault collateral) and whatever DAI paid by the winner of the auction is then burned (destroyed) at the same time the ETH is handed over to the winner.
MakerDAO have given themselves an out of sorts to prevent a liquidity crunch on DAI. You can now create vaults that are backed by USDC 1:1 with liquidation disabled. But if anything this will probably cause the cascading failure to happen more rapidly when it does. If there are more bidders for the liquidated vaults then the margins will be tighter and the need to market sell the ETH won at auction will be greater.

>>17876335
Except eth is about to moon sweetie get fucked

>>17876715
>it will move like 40 dollars maybe
I think you're underestimating how thin orderbooks are and how many buy orders will be pulled once the price starts moving down. $200MM worth of eth dumped on the market in a single day will absolutely drive it to 0

>>17876335
oh this thread again

so when are u gonna start shillng aawv or whatever the fuck it's called

>>17876760
I see, makes sense. So DAI is only bruned when you pay back your loan, but int he case of liquidation, people buy the liquidated ETH in an auction and burn back the DAI its bought with to collateralize the system.

So you are saying there is high incentive for DAI holders to buy vaults if ETH drops and then market sell to USDC to drop price lower and just repeat and repeat

>>17876570
You are describing a cascading liquidation down to zero. Something that could have happened to any crypyo since leverage was introduced. Maker is not much different than BitMex here.
There is no artificial circuitbreaker on crypto leverage (BitMex, Maker...), but there is a natural one that has been working for years: people buying.

Your cascading liq' to zero can only happen if there is no buy pressure coming in with a drop. If you werent a newfag, you would have noticed all the aons here waiting to get in at double digits.

>>17876867
But I would imagine there is some large DAI whales that are also ETH whales to prop up the price. I'd even speculate that part of getting USDC accepted was Coinbase to help facilitate with that. Thoughts?

>>17876570
If it really goes to zero does that mean I can get eth at ico price?

>>17876883
This is a perfect scenario where smart money like say major tech companies sitting on major cash reserves can get control of ethereum once it gets low enough

When will this scenario happen OP?

>>17876335
when and source ?

>>17876851
Hi manvinder, you're thinking of app.aave.com

>>17876793
>bear market
>moon
yeah ok bud
>>17876851
literally who and what?
>>17876867
yes any rational self-interested market actor would do it, ensuring of course they exited into USDC
>>17876883
>Maker is not much different than BitMex here.
completely agree
>Your cascading liq' to zero can only happen if there is no buy pressure coming in with a drop. If you werent a newfag, you would have noticed all the aons here waiting to get in at double digits.
sure ok maybe it won't drop actually to 0 but you can expect a serious drop as a result of this. I wouldn't be surprised to see single digits.
>>17876905
lots of ifs
>>17876915
>If it really goes to zero does that mean I can get eth at ico price?
you can get it at whatever price it is when all the eth in all the vaults are sold

>>17876984
I think you underestimate the incentive some holders have to take over control of the network and keep the narrative going. Short term gain won't outpave long terms revenue. There is a certain schelling point where buy pressure will flood in

>>17876965
>>17876967
Another 30% drop in ETH would trigger it.
Watch the system collateralization here:
https://defiexplore.com/stats
If it falls to 150% it triggers liquidations automatically according to the markerDAO rules.
You can read about liquidations here:
https://github.com/makerdao/community/blob/master/faqs/liquidation.md

>>17877020
>There is a certain schelling point where buy pressure will flood in
no one wants to catch a falling knife, this will all happen very quickly
the only reason the market didnt already hit 0 is because someone ddos'd bitmex as a sort of fallback breaker.
maybe they will ddos eth so auctions can't be bid on? who knows?

as a retard, how do i profit from this? everything i have is in cash atm because i got out before the corona crash

>>17876335
Allowing me to max out my stack on a one-time event... Based.

>>17877251
Fish the bottom of the book with really low buy orders and hope they get filled if it happens

So basically ETH goes to 0 and everyone rushes to buy some cheap ETH and price moons back to 1k?

>>17877363
>So basically ETH goes to 0 and everyone rushes to buy some cheap ETH and price moons back to 1k?
I mean maybe... or maybe all the ICOs that have ever happened scramble to liquidate their holdings of ETH as well and literally everyone tries to get out of ETH all at the same time
Then it's not a bounce it's a bitconnect scenario
Your guess is as good as mine I'm just reporting the facts

>>17877022
Thanks for the info. I have buy set for ETH should I pull them and wait for sub $50 or is this going lower?

>>17876335
no, the danger has passed. Look at the price of dai dropping. It's going to be below 1.01 tomorrow.
The problem was lack of liquidity to process liquidations, not simply eth price falling too fast (I mean, it's what caused the liquidity problem).

Just bought 100 more ETH.

>>17877385
>I'm just reporting the facts
ICO scams exited their ETH holdings a long time ago. If they didn't they're fucking retarded.

>>17877457
>Thanks for the info. I have buy set for ETH should I pull them and wait for sub $50 or is this going lower?
I wouldn't be surprised if it hits single digits, that's a call you're going to have to make for yourself
>>17877464
>no, the danger has passed. Look at the price of dai dropping. It's going to be below 1.01 tomorrow.
>The problem was lack of liquidity to process liquidations, not simply eth price falling too fast (I mean, it's what caused the liquidity problem).
Different problem anon
Existing vault holders whose vaults are collateralized by ETH not USDC can't get the ETH out unless they can raise enough USDC (i.e. fiat) to pay off the debt from the vault. Basically they're all fucked rn. Adding liquidity to DAI actually makes the problem worse because auction bidders will be cashed up, making the auction margins thinner, making the need to market sell the recovered ETH much greater.

>>17876630
How can I interact with the contract? Through Mist?

>>17877356
i should put my cash into usdc and do limit buy orders?

>>17877594
no it's the same problem, because with dai being liquid auctions are going to buy only enough to cover the deficit, not entire vaults.
A 30% drop liquidates 5.7M dai. That's not going to cause a collapse.

Reading these kinds of threads makes me feel dumb

>>17877719
OP designed it to make you feel dumb. He wants you to sell your ETH so he can scoop some cheapies

>>17877594
ok that's the exact value for a 30% drop
~75983 ETH to be liquidated & 4685785 Dai to be liquidated resulting in -313683 surplus
that's for an instant drop
your collapse is not going to happen

>>17877594
If it hits single digits all erc-20 tokens are going to be smashed as well. Sounds like a doomsday event.

So it's better to short ETH than BTC

>>17877689
>no it's the same problem, because with dai being liquid auctions are going to buy only enough to cover the deficit, not entire vaults.
interesting...
the minimum lot size is 500 ETH might still be significant if say 2000 vaults all get bitten for 500 ETH at the same time
at the end of the day we'll just have to wait and see how it plays out

>>17878013
yeah I think the change to 500 eth lots and a 3 hour auction time was a mistake. 100 eth and one hour would be a better tradeoff.
Still many people in this space have 5M to process a 30% drop.

>>17876335
Glad I bought RSR instead. :)

>>17876630
I have 200 eth, would that be enough to join the auction fren

>>17878156
you need dai, not eth.

>>17876883
Speed is of the essence here.
A flash crash will liquidate, but how fast can you buy unless you jave limit orders preset?

>>17878127
for the sake of the space I hope your right, but watching the previous liquidations past couple of days I am not so optimistic. I think the vault owners are cash strapped and the auction keepers are self-interested
>>17878156
>I have 200 eth, would that be enough to join the auction fren
you'd need ~500 eth to convert to dai to join the auction if you want a good chance of winning one since the lots are for 500 eth

>>17878152
RSR is fucking stupid
Should have bought Bidesk. Buy literal shovels.

>>17878246
>I think the vault owners are cash strapped and the auction keepers are self-interested
it's only a game of time. I didn't even think about getting in the liquidation business, but I plan to now. Unfortunately I sold all my dai for usdc between 1.02 and 1.03 (yeah, didn't expect the catastrophe that happened) and even went into debt to sell more. I'm just waiting for the peg to go back below 1.01 to close this position and forget about this, then I'm going to run my own keeper bot.

I hope they reduce the lot size eventually, I have enough to process 500 eth now but only one at a time, but that stops being true if eth goes up a lot

>>17876335
Pal I would love 2 million eth. Give me it all.

>>17877594
Where can I set orders at single digits? Chinks won’t let me go below $23

>>17878246
Ah shit. Who wants to team up for the other 300 eth?

>>17878587
If you want eth you need at least 1250 for the safe 250% collateralization margin. Or 1000 for compound, but it's probably going to be empty of dai at that point

fuck it, I'm going in

>>17878891


>>17878246


So what can I do with just 200 eth? Dont know anyone who could lend me enough :<

>>17878891
he can sell his eth on like dex.blue for example and just buy dai with it, he doesn't need to open a vault to get dai

>>17879180
Regarding dai liquidations, currently nothing. Some people are building pooling solutions however.
>>17879187
yes but then he doesn't have eth anymore

>>17879180
>Dont know anyone who could lend me enough
yeah unironically lending is both the problem and the solution and very profitable and very risky and very expensive
welcome to crypto ;)

>>17879211
>yes but then he doesn't have eth anymore
agree but assuming he wins an auction he will effectively be buying it back

>>17879257
or eth moons and he watches it regretfully. Borrowing dai is only a cost in interest (+ risk), while selling eth changes the portfolio directly

>>17879452
yeah vaults make tons of sense if eth is going up in value and no sense if it's going down
it's a clever system but I fear not clever enough
see you anons in a month we'll find out how it all panned out

>>17879639
>see you anons in a month we'll find out how it all panned out

based holder

>>17876630
>There's no proper user interface because the makers of MakerDAO are retards
we know that already
they drag their feet because of personal biases and their project is failing because of it

the real test of makerdao is going to be when full PoS happens. Eth changes from something with ~0 yield to something with ~5% yield. That means even a sf of 0 is equivalent to 5%, but sf has to be close to the real usd rate in the long term.
They can't make it negative either because the yield on eth is lost, not just ignored.

The solution would be to allow staked eth as collateral, but that's kind of risky. The best that can be done is something that needs 10% of unstaked eth as collateral for 90% of staked eth, the purpose of 10% to be a penalty for slashing.

>>17879787
I love this one. It's so subtle.

>>17880136
interlinked
https://en.wikipedia.org/wiki/Isambard_Kingdom_Brunel

>>17879211
Any links/tips to find those pooling solutions?

>>17880910
bamp

>>17880910
not ready
https://forum.makerdao.com/t/black-thursday-response-thread/1433/75

>>17876335

This is good because all of the ICO scams who acquired and held ETH like Request Network are getting BTFO right now.

I'm too much of a brainlet to understand any of this so I just all in'd on ETHBEAR as an alternative, did I do good OP?

>>17881616
>>>17880910
>not ready
>https://forum.makerdao.com/t/black-thursday-response-thread/1433/75
Thnx, reading the thread now. Any way to contact you btw

>>17883919
no offense but I don't want to be your IT support

>>17876335
Hey faggot, guess what? Exactly none of the shit you have predicted in this thread is actually going to come to fruition, so shove your FUD up your ass, incel.

I'm just excited for the global settlement, personally.

>>17883951
Np fren, you seem well read is all