MakerDAO, the poster boy of DeFi ecosystem has been on a hot seat ever since that dreadful day of March 12th where vault holders got liquidated amassing a loss of no less than $8.325 million due to rapidly falling price of ETH. This day will forever be remembered as “Black Thursday”.
Liquidation Here, There & Everywhere!
When the Ethereum Network got congested at that moment, GAS fee raises immensely causing investors holding collateralized debt position (CDP) unable to repay debt or add ETH collateral on time to lower their liquidation price. Same thing with those that uses DefiSavers App “Automate” feature because the automation did not kicked-in due to Maker’s price oracles failure to update their feeds in real-time and by the time it does, the reported price immediately decreased by more than 20% causing many CDPs liquidation ratio falling below the 150% minimum level.
The DeFi community is looking closely at MakerDAO’s short-to-long term move and how they plan on handling what others saw as damaged reputation coz based on what happened on “Black Thursday” it sure does leave a bad taste in the mouth of its supporters including those people that starts getting interested in this ecosystem.
And It Didn’t Stop There
This sector of crypto industry just can’t get a break! The media is all over it, critics can’t stop trolling it in social media and supporters can’t help shakin’ their heads as these events happened:
Maker Foundation is facing a class-action lawsuit filed by investors who lost funds during the “Black Thursday” liquidation
dForce’s lending platform LendF.Me was hacked on April 19th by nearly $25 million…. Ouch… The hacker returned back the full amount though… Yey!
Hegic Options Exchange bug freezes $28,000 of ETH forever on April 23rd just hours after its launch (company downplayed the situation by saying that it’s a typo in the smart contract)
Some Good News… Finally!
It’s not all bad in DeFi Land. Here are some of the recently announced news that excites me in the space:
MakerDAO is considering payback for collateralized debt position (CDP) users that got liquidated on “Black Thursday” were 65% of public governance poll voters voted “Yes” for compensation (this is quite controversial as the platform’s reputation is on the line)
Maker holders voted to accept “wBTC” as a new collateral in generating DAI
Keep Network is launching its highly anticipated Bitcoin-pegged 1:1 ERC20 token “tBTC” on to the Ethereum DeFi ecosystem. Currently being supported by more than 40+ DeFi projects
Compound Governance went live on April 16th making its protocol collectively govern by their community, thus, no longer administer by the Compound team
Gnosis Safe, a multi-sig wallet is now live and will let you manage different DeFi apps right on your dashboard
Screenshot of Gnosis Safe where you can manage multiple DeFi apps all in one place (Gnosis blog post)
Honest Thought
I really do think DeFi is cool and will continue to grow in the future as there are many new players coming in the space that are backed by venture capital firms with deep pockets.
There are lots of DeFi projects that I truly enjoy using coz it makes it easy for everyone to manage, automate and jump around in different platforms with only few clicks of a button. But that being said, I still feel that the risks of being hack, smart contract bugs and other protocol issues still outweighs the potential growth of someone’s portfolio. Because of these associated risks I decided that I won’t be touching DeFi any further…. at least for now!
And I’ll be more than happy to watch it on the sideline and wait until the ecosystem matures moving forward.
DeFi or not, it should be mandatory for a protocol to undergo a security audit and should be fully tested before being deployed and open for public. Until then, DeFi still has a long way to go before its ready for PRIMETIME.
DISCLAIMER: Opinions are mine and it’s not a financial advice. Cryptocurrency investing is very risky as it can be very volatile most of the time in addition to hacks due to vulnerability exploits on some protocols. Do not put your life’s savings into it or even any amount that you are not comfortable and prepared to lose in the process.
In every event a lesson(s) must be learnt. The guy by now must have known where he got it wrong, and must have fixed it. Luckily, there are bailout options!