FLAP (Surplus Auction) parameter adjustments, 11th Jan 2021

Hey all,

Everybody watching or participating on Governance & Risk call past week have been notified about current inefficiencies happening at FLAP auctions. @cmooney and one of the active MakerDAO keepers “d_zap” have mentioned that due to low flap_beg value there isn’t enough incentive for keepers to bite Flap auctions and propose a healthy bid. Flap auction zero bidders have therefore been noticed last week.

This is why we are proposing an urgent on-chain poll to increase the current 2% flap_beg value to 4%.

Additionally we believe a higher flap_ttl value than the current one of 30min is needed due to the increasing likelihood of a high amount of FLAP auctions triggered if a larger liquidation event occurs. If we have 15m of FLIP auctions successfully cleared, MakerDAO would collect 1.95m in penalty fees which would go directly into FLAP auctions. This represents around 200 auctions and keepers might want to have more time for bidding. Therefore we propose to increase current 30m flap_ttl value to 1h.

Note also that a Surplus Buffer increase to 10m poll is also scheduled this week which should also mitigate the whole situation if approved and if this poll doesn’t pass. However a FLAP parameter adjustment is in our opinion needed for reasons mentioned above.

10 Likes

This proposal will go on-chain today with the rest of the weekly polls. Assuming the poll ends favourably, the change will be included in the executive proposal on Friday.

3 Likes

I doubt I’ll vote at 400 Gwei. When can we expect liquidations 2.0 (winter/spring/later)?

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@Primoz Have you considered raising the surplus lot size from 10k DAI to reduce gas overhead? Then you could also possibly use a 3% flap_beg instead.

2 Likes

@jiecut yes we did, but it seems there is even lower keeper participation for FLAPs as for FLIPs and therefore a smaller lot size is preferred to keep access to as many participants as possible.

3 Likes

Is the lerped increase of surplus buffer intended to be part of the poll?

Sounds exciting, hopefully we see more participation with the juicy 4% beg. (Though we’ll have to wait till after the SB gets filled)

No, but it’s included in this poll (sans lerp).