The dust seems to have now settled on yesterday’s events and it seems like we have some peace and quiet again in the crypto world. I think what is the most important thing to say is congratulations to the developers for making Maker a far more robust protocol than it was this time a year ago. This was a much bigger stress test than Black Thursday and this time, the protocol performed amazingly!!
That said, I’m gonna add a short list of things that didn’t go quite perfectly last night. Hopefully, these are things we can discuss and improve before the next seismic crash - whenever that may be. We talked about some of this on the chat but I think it would be nice to put it one place for different teams to look through.
The OSM feed did not update at 13:00 UTC on 19/05 as it usually does due to insufficient gas. Gas prices were insane at this point, around 2500 gwei. As a result, the liquidation prices remained several hundred dollars above the true price, even though the crash persisted for well over an hour. I believe we had ETH at $2440 when it was actually under $2000 for an extended period of time. We were lucky that ETH bounced back from there but had it crashed further, this price feed delay might have caused bad debt issues.
Two vaults were liquidated and we could not recover their debt fully. This was simply liquidations being stretched to the limit presumably. Several vaults were liquidated and no collateral was returned - again a sign that this stress test pushed our systems pretty hard. Would we have survived had ETH crashed down to, say, $1400? This may also be related to the oracle issues in 1 - perhaps we were just too slow to update the prices and hence fell behind on the liquidation process.
ZRX had really low liquidity which meant that the auctions took a long time to clear. Moreover, some vaults which were underwater could not be liquidated because there simply wasn’t enough ZRX liquidity anywhere. I’m not sure if the same situation affected any other tokens but it was an interesting situation that played out.
The PSM generally helped keep DAI pegged. However, I’m not sure if USDC itself was on peg - sources like Coingecko indicate that it was not. USDT certainly did not stay pegged. Perhaps it’s worth thinking about how the PSM should function when our oracles suggest that USDC is off peg?
These were my four observations from yesterday. And again, congrats to all, especially the Liq 2.0 guys for massively improving the protocol and making it ready for Wild Wednesday.