Document Analysis NLP IA
FREQ, RAKE or TFIDF
Summary (IA Generated)
The Maker community is not entirely united in seeing the loss as a major issue.
One community member argues that as long as DAI is trading above its peg, the under-capitalization can be maintained because it would naturally cause DAI to lose, rather than gain, value.
Other community members believe that the DAI borrowers whose collateral was liquidated on March 12 should not be compensated for their loss.
It is important to note that a MakerDAO liquidation does not entail the loss of the entirety of the user’s capital.
If the value of the Ethereum collateral falls below 150%, “Keepers” can trigger an auction for the value of the outstanding debt, plus a 13% liquidation fee.
Through the zero DAI auctions, however, the users lost an extra 21% of their capital that was supposed to be returned.
Some community members argued that the loss is not severe enough to warrant a refund, and that users were aware of the risks in participating in the Maker system.
The “PR impact” of zero-DAI liquidations was also mentioned as a reason for compensating MakeDAO’s users.
An auction to shift the losses to the stakeholdersFollowing the discussion, the Maker community locked in a proposal to auction newly-minted MKR in exchange for DAI, which should cover the hole in collateralization.
Selling MKR for DAI would thus compensate the users, while diluting existing stakeholders — effectively socializing the individual losses.