The recent increase in duration of FLIP auctions is not without risk. In a falling market (which is the scenario we need to plan the most for), waiting for 6 hours to sell the collateral could result in far higher losses for both CDP and MKR holders than if they were sold quickly. I realize recent experience with congestion indicated 20m may be too short, but I think 1 hour is plenty of time to allow bids to go through in times of high gas prices. We may need to find ways to incentivize keepers more to participate, but lengthening the auctions to 6 hours is dangerous and provides no additional incentive for keepers.
I agree with what you said about the potential for adverse market moves.
The other issue I previously highlighted with a 6 hour ttl is that is an expensive option for a keeper to be selling, which likely will lead to less competitive bids on collateral auctions, and an increase in the haircut that liquidated cdp holders will take.
Keepers lock their dai up at a set bid, but do not know for 6 hours if they have won and can not hedge or trade the collateral that they are bidding on for 6 hours. If the market moves in their favor, above the minimum bid increment, someone will out bid them which will restart the 6 hour window. If the market moves against them, no one will outbid them and they will be forced to sell their collateral at a lower price. Holding a price for 6 hours certainly will lead to worse prices in liquidations.
Yes giving a rough glance at the market data on coinmarketcap of the black thursday from March 12-13, the biggest drops happened at 10:00am, 13:00pm, 23:00pm and 01:00am, so mostly within 6 hours from one another.
Is anyone able to say how long the keeper transactions would have taken to get through during that time had the auctions not been 10 minutes long? As in, can we use the history of the transaction pool at that time (if there’s any record of it?) to determine that the transactions would have gone through after about 30 minutes, or would they have taken 3 hours?
Most keepers will not bid until the final hour anyway to avoid the problem you are describing.
The issue is setting the right gas price. If you set the wrong gas price, theres no guarantee that your transaction will be confirmed even in 6h. If you set the right price, it will be confirmed quickly even in times of high congestion. On Black Thursday, I made multiple transactions and had them confirmed quickly but I paid in some cases 200 gwei gas price. Still, this would have been highly profitable for any keeper- the only problem was that they weren’t programmed to adjust the gas price correctly.