The recent price drop of Ether (ETH) has proven to be reliable and also reveals the weakness of Dai’s stablecoin and the decentralized financial ecosystem DeFi established on the coin.
Decentralized stablecoins pegged with Ethereum DAI retain their value despite the fact that Ethereum has evaporated more than 18% of its value within two hours – down from $ 190 to $ 155. At the time of writing, Ethereum is trading at $ 169.
Influence from high transaction fees
Service management protocol DeFi Saver on 24/09, because of the large volume of transactions on the Ethereum network, the system has “struggled” to adjust all CDP rates during this time. ”
CDP is explained as a type of mortgage debt used as collateral managed by smart contracts to operate the DAI stablecoin.
While MakerDAO has plans to support other types of assets, up to now only ETH has been accepted as collateral for CDPs.
Mortgaged assets will be kept to ensure the value of DAI. As DeFi Saver explained in another tweet: “MakerDAO has an automatic CDP liquidity mechanism when the mortgage debt ratio drops below 150%.”
The company also has a separate service that helps delay the automatic liquidity function of the CDP established on MakerDAO’s ecosystem.
However, the company acknowledged that – because of its high volume and high transaction fees – the system was “unable to postpone the liquidity of two CDPs”.
The company said it intends to compensate the two users affected by the incident.
“While our automated functionality is still in beta testing, this issue has made us regretful to letting some users be disappointed. We are ready to compensate for the losses you have suffered. We are trying to reach these two CDP owners. ”
On the other hand, the company said, “20 other contracts have been automatically postponed by the system during the recent drop.”
DeFi Saver announces that the system has been adjusted to the current transaction fee and that the automation process works correctly.
The author of “Mastering Bitcoin,” Andreas Antonopoulos, explained on Twitter when a user said that this is proof that the DeFi ecosystem is not working properly:
“Things are really not that bad. DAI maintains a stable price, CDP liquidity protection contracts still perform well except for the last two cases. This is still a good test and everything is on track. ”