Vault Compensation Plan v2

If it is not separating between apples and oranges, than i am voting against it.

  • Make 2 poll`s: 1) 0 bid; 2) Selfliquidators
  • Make 1 poll for all closed CDP`s on Black Thursday

0 voters

@Kukkio I appreciate your engagement and initiative, but at this point the plan has been scoped out. We are not planning on separating the vaults who were liquidated at auction vs those who self-liquidated before putting it up for a vote. The reason that the compensation group elected to include self-liquidated vaults is these individuals most likely saved Maker from suffering additional losses during Black Thursday. It doesn’t seem fair for MKR holders to leave these individuals out of compensation when they have benefitted from their actions.


I’ll vote against it.

I am a 0 bid victim. My damages orriginate directly from the technical problems in the Maker protokol. There is a direct causality. It is easy to solve on chain.

The problem with self liquidators is not easy understod and the causality between damages and the Maker protokol are not easy to prove. It is also not easy to calculate and need manual case by case input.

The case of the self liquidators will drag things for a long time.

For a quick sell and positive media outcome - don’t try to sell apples and oranges in one basket.

I also wanted to give an update on progress and further details about the compensation calculations. We are planning on the poll going live this coming Monday September 7, and running for 2 weeks until September 21.

The compensation calculations work as follows:

MKR compensation amount = (collateral deficit percent * collateral value in DAI) / 250

collateral deficit percent = compensation percentage (determined by this poll) - percent of vault collateral already received from liquidation

collateral value in DAI = debt tab at time of liquidation * liquidation ratio

Integrating all 3 formulas:

MKR compensation amount = [ (compensation percentage - percent of vault collateral already received from liquidation) * (debt tab at time of liquidation * liquidation ratio) ] / 250

Important note: In my initial post in this thread, I had made an oversight when calculating the maximum MKR amounts that would be required for each compensation percentage option. I had been multiplying the collateral deficit percent by the debt tab at time of liquidation, while I should have multiplied collateral deficit percent by collateral value in DAI. This means that the numbers posted in my initial post must be multiplied by the 150% liquidation ratio to correct this error.

Given recent increase in demand for auditors and developers, the total operating expenses requested for handling compensation will be set to 50,000 DAI. Any unused funds will be returned to the Maker surplus after the compensation process has finished.

Please refer to the revised numbers below, which show the maximum amount of MKR and DAI that will be authorized for each compensation percentage option presented in the forthcoming poll:

  • 24.67% (theoretical maximum auction yield) - up to 25,925 MKR and 50,000 DAI
  • 21% - up to 21,627 MKR and 50,000 DAI
  • 18% - up to 18,216 MKR and 50,000 DAI
  • 15% - up to 14,871 MKR and 50,000 DAI
  • 12% - up to 11,691 MKR and 50,000 DAI
  • 9% - up to 5,592 MKR and 50,000 DAI
  • 6% - up to 2,748 MKR and 50,000 DAI
  • 3% - up to 917 MKR and 50,000 DAI
  • 0% (oppose vault compensation) - 0 MKR and 0 DAI
  • Oppose current compensation plan (support vault compensation) 0 MKR and 0 DAI

As per the original post, it is considered highly unlikely that 100% of eligible vaults will claim compensation, so the final cost to Maker for any given poll option will likely be lower than the amounts shown.

One more thing to note: if the poll resolves with a majority of votes in favor of “Oppose current compensation plan (support vault compensation)”, or if this poll resolves with no option receiving at least 50% support, this will be considered a vote of no confidence in the current vault compensation working group. While working group members including myself will remain available for consultation, other members of the community will be empowered to take leadership over the vault compensation process.


Thanks for sharing the update, costs seems to be very clear for the Maker holders, which is a good thing to have in a poll.
As previously discussed, it would be nice to add an explanation in the poll that the compensation in Maker is only because of technical reasons and that compensation in ETH would be more fair. This compromise (considering current market value of Maker/ETH) will result in a lower compensation so even the 24.67% is not equal to full compensation of the vault holders.

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Welcome to decentralization folks.

No ONE single player has authority to act. While one could say the Foundation could have.

Quite honestly they couldn’t. So we are left with the DAO and people basically working for free who for the most part don’t have a vested stake (vault2288 is the only one in the compensation group who has a vested interest I know of and he has been more than patient) trying to push this rock up a really high hill.

I DO not see anyone stepping forward with a second plan or to even try to do anything except get people to sign on to a lawsuit which will probably take a number of years if not a decade to settle.

A few of you have stepped up offering to help (thank you) and while I know we will need some help IF governance decides to move forward we will need more help. The problem is the last poll was turned down by governance on a really thin vote as well as margin hence this has set this process back.

Could this have been done faster? A rhetorical question given the complexity and contentiousness within the community itself about even offering ANY form of compensation.

Honestly I begin to think that at every on-ramp to crypto with money a big blazing warning needs to be posted and signed off on.

Warning - you can lose all of your money - enter at your own risk - and by signing off you sign indicating your understanding that no-one owes you anything if you lose all of your money in the crypto box. I had that warning given to me repeatedly. It is so true my wife considers all of our crypto assets as ZERO until they buy something for us.

So I am with @LongForWisdom here my empathy is dimishing for people who either can’t or won’t take responsibility for their own actions. Plain and simple here is if you don’t understand the risks and can’t afford to lose the money trying to find out - don’t play the game. This space still is wild west days. While centralized organizations are always going to do better then decentralized ones in some ways we all have to weigh the pros and cons of where we are putting our funds. In the end we have to put our big boy pants to take on the responsibilities for our actions and enjoy our own profits as well swallow the losses like grown adults.

A general rule about playing in high risk spaces, spread risk - far and wide. Don’t put all your eggs into any single basket for this one and many other reasons.

Put as simply as possible Maker doesn’t owe anyone anything no matter what happens. Given what could happen no one should expect that if MKR price goes to 0 that anyone will be made whole. DAI holders, vault holders, etc. It is a real risk. Is it probable - I think not. But it is possible. Yes. The FACT that Maker is still here after BT is a testiment to ability of the DAO and protocol to survive some difficult times, and that it will again. But this idea that somehow someone was wronged here. I can’t wait to see this Maker court case resolve actually one way or another just to see what the judges think when presented with both sides of the facts and weigh it against law.

I have to say I don’t see Maker as a crypto scam and that if you can’t read a smart contract it is not the fault of anyone else except you the user. I want one person to tell me they felt they reviewed fully the smart contracts on Maker, Compound. Yearn, Uniswap, before they used the things. I haven’t - have you? So lets try to be honest not just with ourselves but each other here about the reality of where we are at. This space is still experimental, still the wild west and yes indeedy you can still lose it all. I think it will take at least 10-20 years before this space matures in a way to be able to service mom and pop joe-six pack in a way that most people are used to. Which will mean the same stuff we deal with at banks (KYC/AML everywhere, limits and constraints as well as locks on capital based on certain constraints being exceeded. or other issues, etc.) Everyone that wants frictionless money and premissionless access also will have to deal with ‘uncompensated losses’ and ‘unexpected events that cause losses’. imo there is no real inbetween, but I am sure if there is some 3rd or 4th party will fill the gap somehow. crypto losss insurance anyone?

My apologies if the above seems crass but I am rapidly approaching my own personal fill of people who feel entitled because they lost something and won’t take their own personal responsibility for their actions leading to that and find a way to move forward. I have friends who to this day still wallow in how they were screwed by something, and how this hurt them that can’t forgive the situation, pull up their pants shake it off and move forward in life positively. Some of the worst shit that happened to me later I looked back on as the ONLY and best lessons that allowed me to grow and move forward.

So I am sorry if what I write upsets you or gets under your gander but if you haven’t learned the above lesson the sooner you do the better of you will be (imo). Look around in this world and you quickly realize no-one owes you anything and to give some real heart felt thanks to anyone who cares about you enough to help you or to be your friend. Hug your mom and tell her you love her, your dad, your friends, everyone because honestly it is really easy to end up alone, miserable, with no-one caring about you. It is even harder in these times to maintain relationships.


The MAKER CDP liquidation simulator. U can use it to demonstrate me your formula. I don’t get it…

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For any individual vault owner wanting to figure the amount they might receive:

(1) Divide the collateral you received after liquidation by the total collateral in your vault before liquidation, and express as a percent. This is your percent of vault collateral already received from liquidation as shown in the forumula above. (This number may be 0%)

E.g. if a vault initially had 100 ETH before liquidation, and only received 5 ETH after liquidation, this number would be 5%.

(2) Subtract the percent of vault collateral already received from liquidation from the compensation percentage, which will be determined by the upcoming governance vote. This is your collateral deficit percent.

E.g. If governance votes for 15% compensation percentage, the same example vault from above would have a 10% collateral deficit percent (15% - 5%).

(3) Multiply the total DAI debt owed by your vault (the debt tab at time of liquidation) by the minimum liquidation ratio for your vault type. This resulting value is your vault’s collateral value in DAI. Note that for both BAT and ETH vaults, the liquidation ratio is 150%, so the collateral value in DAI = debt tab at time of liquidation * 1.5 for all vaults.

E.g. If the example vault above had owed 10,000 DAI debt at the time of liquidation, their collateral value in DAI would be 15,000 DAI.

(4) To calculate the hypothetical MKR compensation amount, multiply the collateral value in DAI by your vault’s collateral deficit percent, and then divide by 250 DAI/MKR.

E.g. the example vault above had a 10% collateral deficit percent and a 15,000 DAI collateral value, resulting in hypothetical compensation of 6 MKR.

Bear in mind that the compensation amounts received will depend on the compensation percentage selected by governance in the upcoming poll, and any poll result will need to be passed in a subsequent MKR executive vote before compensation will be formally approved and become available for disbursement.


I can only repeat, that DAI value does not matter. The math is easy. I just need the right input data.

The V2 formula has some missing input information.

IF… IF V2 moves on with your Formula, than ETH price input is needed.

And even if decided, that ETH gets a DAI value, then lower ETH price gives more compensation. Higher ETH price gets lower compensation.

Put the numbers in and you`ll see what happens.

Please correct me if i am wrong in this.

ETH price input is not needed because it is captured implicitly in the vault’s DAI debt at time of liquidation, as well as the liquidation ratio. At the moment when the price of collateral drops below the vault’s liquidation price, the collateral is worth exactly 1.5x the vault’s debt. This holds true regardless of the vault’s ETHUSD liquidation price, ensuring vaults that got liquidated at lower or higher ETH prices will all be treated equally.


It works.

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@monet-supply are we still on target for the vote going live today or tomorrow ? Thanks

We’ve been having some issues trying to get the poll correctly set up as ranked choice IRV, instead of single choice. Hopefully the poll will be live by tomorrow, thanks for everyone’s patience :slight_smile:

Error in Vault Compensation Poll <-- for updates on the poll.

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Just relaying this here, vote is now live :


Don’t fall for this guys

I just realized the quorum requirement of 50% very hard to reach for 10 choices… The votes will be naturally more scattered with more choices, think about giving 1000 choices…
I guess there is nothing we can do now. Finger crossed… @monet-supply @MakerMan @LongForWisdom

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The poll uses ranked choice voting, so people are able to vote for all options they find acceptable in their order of preference. I’m hopeful that we’ll reach quorum within the next week, but it may depend on voters’ willingness to compromise a little bit.

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Im confused… Theoretically you could have 49% vote for 18% compensation and 49% vote for 15% compensation and this would mean no compensation? Please tell me I’m dumb and this is not true? I am hoping I am stupid and can’t read.

I honestly thought that 50% or more had to vote for some level of compensation and the one with highest % would be the amount of compensation.

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This is theoretically possible, but doesn’t seem likely. Voters who choose 18% as their first choice can select 15% as one of their lower ranked choices, so if 18% didn’t receive enough support, their vote would pass to 15% and still help push the voter support over the 50% threshold.