If you put crypto into a Maker Vault you can issue Dai. But, your crypto must have a greater value than the issued Dai. That relation of values has a required minimum level, and when your crypto falls below it, it's a FATALITY (Liquidation) time
How it works? Thread timeπ
2/15
π± Liquidation is the process of selling collateral to cover the amount of Dai a user has issued from their Vault.
It ensures that Dai is always backed by an appropriate amount of collateral by closing-out Vaults that are under their min. required Collateralization Ratio.
3/15
πΌ Let's assume you issued 10,000 Dai through a Vault in which you put 6 ETH and the current value of your 6 ETH is 18k USD (1 ETH = 3k USD). Ok! Your Vault is healthy, because your Collateralization Ratio is above 150%. Actually, this Ratio is 180% with the current values.
4/15
π A wild FUD has appeared! Your ETH starts to fall and the Coll. Ratio just broke below 150%
Calm down, you have time to save your vault because the oracle reporting ETH price to the Protocol is updated 1 time per hour. You can watch this data at daistats.com.
5/15
π΄π€ But, you were sleeping soundly while this was happening. When the oracle reports the ETH price to the Protocol and your Col. Ratio is setted below 150%, your Vault enters in the Liquidation process.
6/15
β οΈ In short, Liquidation is a process in which the protocol takes the collateral from the Vault and sells enough to cover the debt along with a Liquidation Penalty, leaving the remaining collateral available for withdrawal by the user.
7/15
π€ When is the debt covered? Liquidations are canceled in Dai which are then removed from the system. So, for the liquidation to be successful, enough Dai is required to stabilize the deficit that the fall of collateral may cause.
8/15
π¨This sale actually is an auction that anyone can participate in. The bidders of these auctions are known as Auction Keepers. They are external actors that are incentivized by profit opportunities to automate certain operations around the Eth blockchain. This includes:
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π° Seeking out opportunities and starting new auctions
π€ Detect auctions started by other participants
πΈ Bid on auctions by converting token prices into bids
10/15
π³π± The process is based on Dutch auctions which settle instantly. When an auction has started, the price begins high and drops over time. When it reaches a price you want, you can buy the collateral immediately.
11/15
π¬π§ Dutch auctions were introduced in the Liquidations 2.0 update. Previously, these auctions were based on the English auction system, in which Dai bids are placed, with a participant's capital remaining locked until they are outbid or until the auction terminates.
12/15
β οΈ In addition to the collateral, A Liquidation Penalty is a fee paid by Vault owners when the value of their collateral reaches the Liquidation.
13/15
πΉ The penalty is added to the Vaultβs total outstanding generated Dai when liquidation occurs, which results in more collateral being sold to reach the outstanding debt plus the penalty.
14/15
π Proceeds from Liquidation Penalties are put towards the Surplus Auctions, which result in burned MKR.
And that's we get this FATALITY.
If you want to learn more about Liquidation and their actuions processes, here are few links:
Dai is almost ready to jump into ... Arbitrum π₯
Maker Protocol Engineering CU are working to connect Dai to @arbitrum rollups solution. They will conduct a final audit of the Custom DAI Gateway before the launching πͺ
What is Arbitrum? How does it work? Thread time! π
2/15
ποΈ What is a rollup?
A rollup is a scalability solution in which transactions are written on Ethereum, but the actual computation and storage of the contract are done off-chain
Transactions are executed on a chain that runs a version of the Ethereum Virtual Machine (EVM)
3/15
βοΈ After executing transactions, the rollup batchs them together and posts them to the main Ethereum chain.
ποΈ We can think of the assertion as "rolling up" all of the calls and their results into a single on-chain transaction.
β Core Units completed the final decentralization of @MakerDAO and its protocol
Now the workforce of a DeFi protocol that generates hundreds of millions in revenue is fully decentralized
How do Core Units work and why are they the future of work? Time for a new thread π
2/14
π From the beginning, Maker was conceived as an entirely decentralized organization. But for this to become a reality, it was necessary to build a solid base.
For this reason it started as a Foundation with employees in a traditional scheme.
3/14
π― This year the objectives of the Foundation were achieved, and therefore it was dissolved.
π¨βππ§βπSo, without a Foundation, where is the workforce of the people who will continue to keep working and growing Maker? Core Units have arrived!
MakerDAO launched 1,000,000 MKR tokens at its inception, but 991,328 is its current maximum total supply according to @etherscan.
The +8.000 MKR "missing" are really burned! π₯
Why is MKR supply dynamic and how does it work? It's time for a thread! π
2/12
β MKR is the governance token of MakerDAO. Its main functionality is to be used as vote power to approve or reject improvements and changes to the Maker ecosystem. But, actually there is another reason why MKR exists.
3/12
π€ The token also acts as a source of incentives to govern the system well. This is because its supply can change according to the situations presented by the Maker protocol.
πMaker evolved into a fully decentralized organization! Thanks to the master (CEO) @RuneKek announcing that MakerDAO is now completely self-sufficient and the Foundation has successfully finished its responsibilities. Let's explain this MakerDAO's milestone in a thread π
2/14
π§ Six years ago, Rune conceived Dai in his mind as "e-dollar". His vision was "a popular currency that average people could use on Ethereum to interact with dapps without having to worry about insane volatility".
3/14
πWhat a vision Rune! Today, MakerDAO's team and the Ethereum ecosystem has turned this vision into reality with over 5 billion Dai in circulation, over $9 billion in assets locked in the Maker Protocol and over 40% of all Dai locked in DeFi protocols. β
1/16 Dai token bridge on @optimismPBC was launched! ππ MakerDAO's Engineering Team and Optimism have been working very hard to bring scalability to Dai without losing Ethereum's essence! Here you can read a recap about the implications of this milestone:
3/16 In fact, according to the Optimism Gas Comparison calculator, a MakerDAO poolet ETH conversion might be 14.5x cheaper in OE. About execution time, it's as fast as an instant. π¦