Sequential Process for SCD Shutdown

Will these bites levy a liquidation penalty?

These are all good questions. Either way, all CDP owners will be screwed unless the Maker Team willing to help out by adding more SAI to the Migration Contract before the shutdown.

Hi @chaser these bites do not levy a liquidation penalty. The CDP holder will be returned their ETH minus their debt.

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As I mentioned from the other thread, the CDP owners are pretty screwed. Actually, the SAI owners are facing the same risks (opposite) at settlement as well. This is the main reason that I urgently hope that the Maker team can find a better and liquid way to help the CDP owners and SAI owners to exchange SAIs in a not-insanely-riff-off way (the markups for both sides can be ranged from 30% to over 100% for a 50k SAI trades).

A — Now, the final shutdown is determined to be on May 12th, 2020, and CDP owners only have two options: 1) just wait for the shutdown and do nothing now; 2) get SAI to pay down the debt and close the CDP before the shutdown. Both options are lethal for the CDP holders because option 1) can lead them to face huge potential market risk (if ETH price drops to an unacceptable level, they still need to (get forced) sell their ETHs from the contract collateral at shutdown), on top of potential getting liquidated (if ETH price crashes again) even before the shutdown. And option 2) forces the already financially wounded CDP holders to obtain SAI now with insanely markups (based on current market condition).

They did that 5 months ago. It was called migration, now it’s finished.

No one forced you to wait out the migration period. That was the most user friendly solution, and it was available for anyone to use for months.

The fallback options you described are less user friendly, but they aren’t ‘lethal’ or ‘insanely-rip-off.’

If you want to close manually, buy SAI in smaller amounts from a variety of DEX’s so you don’t pay 30% markups. There is not enough liquidity for you to trade 50K in one go without facing severe slippage (as you’ve noted) so the solution is to trade in smaller chunks.

If you want to wait until shutdown, then your position will be closed at market price. Sure maybe this is undesirable for you, but that was why there was a migration period.

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Copy from my post on Risk thread. Please stop bullying the loyal and early MakerDAO supporters. I have been communicating with you guys nicely, and you should understand how much stress that some of the CDP owners have now. Can you try to think of putting yourself in the position of the CDP 3088 owner now? Although i don’t know who 3088 is, but I sure feel his/her/their pain at the moment…be safe and well. PEACE!

Most of the current top SCD ( CDP ) owners are the loyal and early supporters of MakerDAO as they first created those CDPs about two years ago when ETH was above $300. Most of them were long term bullish on ETH and MKR, so they were willing to deal with the short term market volatilites and prepared to swallow the ridiculous expensive “Stability Fees” (SF) because they believed that they would be able to pay back all the debt + SF when the market goes back up in the future. All they needed was just more time for the market to be recovered because they believed in ETH and MakerDAO. These warriors barely survived from getting liquidated due to the last couple market crashes. The CDP holders were pretty exhausted and financially wounded after long time fighting with the “Whales” and dealing with security issues of this new technology. [ STOP KEEP SAYING THAT “They had couple months of time to migrate”! ] And it was like the light at the end of the tunnel when the forgiven SF for SCD > MCD migration news was out last week, but unfortunately, the good news didn’t last too long as the migration was no longer available after couple days due to limited SAI supply in contract. Speaking of frustration!

Pasting the whole post here, in case people are too lazy to click the Link above.

Most of the current top SCD ( CDP ) owners are the loyal and early supporters of MakerDAO as they first created those CDPs about two years ago when ETH was above $300. Most of them were long term bullish on ETH and MKR, so they were willing to deal with the short term market volatilites and prepared to swallow the ridiculous expensive “Stability Fees” (SF) because they believed that they would be able to pay back all the debt + SF when the market goes back up in the future. All they needed was just more time for the market to be recovered because they believed in ETH and MakerDAO. These warriors barely survived from getting liquidated due to the last couple market crashes. The CDP holders were pretty exhausted and financially wounded after long time fighting with the “Whales” and dealing with security issues of this new technology. [ STOP KEEP SAYING THAT “They had couple months of time to migrate”! ] And it was like the light at the end of the tunnel when the forgiven SF for SCD > MCD migration news was out last week, but unfortunately, the good news didn’t last too long as the migration was no longer available after couple days due to limited SAI supply in contract. Speaking of frustration!

A — Now, the final shutdown is determined to be on May 12th, 2020, and CDP owners only have two options: 1) just wait for the shutdown and do nothing now; 2) get SAI to pay down the debt and close the CDP before the shutdown. Both options are lethal for the CDP holders because option 1) can lead them to face huge potential market risk (if ETH price drops to an unacceptable level, they still need to (get forced) sell their ETHs from the contract collateral at shutdown), on top of potential getting liquidated (if ETH price crashes again) even before the shutdown. And option 2) forces the already financially wounded CDP holders to obtain SAI now with insanely markups (based on current market condition).

B — In addition to the risks mentioned above, is the timing of the shutdown. It is scheduled (voted) for 16:00 UTC on May 12th , and this is just about 3 hours after the Bitcoin Halving (as expected now). Can’t even tell if this timing is just being coincident or plotted. Regardless, this just adds extra risks to the community as people have been discussing about potential market crash right after the halving (though no one really knows the truth until that time, but why gamble with the loyal CDP holder’s valuable asset?). Plus, the final settlement price will be just based on one snap shot at 16:00 UTC on May 12th, and it will provide an easier way for whales to manipulate the market for their own gains (if they want to). This has nothing to do with the robustness of the pricing oracle, because the pricing period is just too short, and too risky for CDP holders (and SAI owners as well). You don’t need to be a finance expert to understand this.

C — Due to many previous CDP liquidating incidences, there are already rumours flying around that the MakerDAO team has been associated with whales to “slaughter” the CDP owners, who are the loyal and long term supporters of this project. And I don’t think it is true at all, can be just a perception. This will further damage the MakerDAO reputation for sure. Not even mentioning about the extra stress adding to people on top the current Coronavirus situation that we are all facing now.

D — With all of the above concerns, I sincerely hope that the MakerDAO team will reconsider the followings to mitigate all of the potentials risks:

  1. Work with SAI liquidity providers to add more SAIs back to the Migration Contract to help CDP holders to make a more smooth and less risk migration to MCD Vaults.
  2. If impossible to accomplish item 1) above, then at least to work with SAI liquidity providers to provide a more fair SAI markets for CDP owners to obtain SAI to close their CDPs properly before shutdown, but not to take advantage of the poor long term supporters.
  3. Adjust the final shutdown date/time to avoid the potential market turbulence (3 hours after Bitcoin Halving), maybe one day before or a week later can be better.
  4. Expand the shutdown final settlement pricing period. A 48-hour or 24-hour average price will be ideal, but just a snap shot at 16:00 UTC will impose huge market risk as mentioned in “ paragraph B ” above.

We understand that the team has been dealing with lots of stresses from different parts of this project on the top of the health crisis that we are all facing around the world now. I believe that you can do all of the 4 items stated in paragraph D above, and manage to help the community to make a smooth transition. Let’s do something before it is too late. And I thank you all for your hard works and contributions to the crypto community!! Stay safe and well. THANK YOU!!

CDP 3088 basically played chicken with Maker governance to avoid having to pay stability fees. They succeeded in having their fees waived, so I don’t feel any pain for them at all to be honest

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If i read your post correctly, you lost money and now you are additionally stressing how could things go wrong further. It likely won’t. CDP owners are long on eth, why would they suddenly change their position. I don’t find your arguments convincing, plus cdp owners had 5 months to voice their opinion on this forum.

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Why do you keep ignoring the fact that CDP 3088 has been given a gift worth close to a million dollars in forgiven stability fees? Surely this is more valuable than any of the risks you are describing,

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I’ve noticed that you’d repeated some good points again and again. I think you’re right.
Personally, I signed a contract, and now the contract is tore up and actually I lost some really money. It’s absolutely a bad story.
I can understand there’re some bad things (not just one) happened and SCD need a solution. To be honest, not much time to think about what might be the best solution. Cause I have a big challenge. My team is trying to develop a platform(DAism.io) for creation and development of DAO.
The future is much better. Best wishes for all of you!

The only party who loses money from shutdown is MKR holders, because of the forgiven interest. Shutdown converts SAI from being pegged to USD to being pegged to ETH, and neither SAI holders nor CDP holders are taking an immediate loss.

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A few more questions:

  1. How can people run bite keepers for this event?
  2. I guess the answer is no, but is there a capital requirement as with regular bites?
  3. Is there any boom/bust spread?

That because you need update with Metamask or your browser, this is sure.

The best way to do this, is to uninstall completely the wallet, reinstall it.

We do not make your transaction, everyone is responsible for his related activities with his crypto and wallet. If you seek some help, we can do this, but prior to this, make sure you have the lastest version, and try with a well updated browser, use Edge if possible. not chrome.

In years and years, Metamask as example, is and have always been running great. If you have transaction in suspension or that is looping , do the step i did recommend and it will work. You can’t really lose, the transaction is visible on the blockchain., always.

I’m not talking about transaction. It is a contract which is going to be shut down.

It is done

ETH back = 906.234 - (64574.669 / $189.2) = 564.93 ETH

I think that’s how you do the math.

You can check the first post for updates, I think you first need to wait for the cool down period to finish.

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Yes, the reason made me confusing is that I’d not known there’s a cool down period. It showed a wrong number.
I have tried to shut down CDP but failed. Looks like the gas is pretty high. I actually set it up to 26 gwei…Scary.
Also looks like I can withdraw. Withdraw or shut down, what’s a little bit cheaper/easier?

You have to wait for the cooldown period, as of right now that is 4hrs remaining. Then migrate your CDP on https://migrate.makerdao.com