MakeDAO vaults will all be liquidated

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?

>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

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.

Except eth is about to moon sweetie get fucked

>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

oh this thread again

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

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

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.

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?

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

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?

when and source ?

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

>bear market
>moon
yeah ok bud
literally who and what?
yes any rational self-interested market actor would do it, ensuring of course they exited into USDC
>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.
lots of ifs
>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

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

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

>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

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

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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?

>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

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

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.

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

>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
>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 user
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.

How can I interact with the contract? Through Mist?

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

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

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

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

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

>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

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.

Glad I bought RSR instead. :)

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

you need dai, not eth.

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

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
>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

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

>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

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

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

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

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

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

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

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

>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 ;)

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

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