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Maker flash crashed yesterday during the market chaos and the MKR price dropped by 58 percent in one day. After the many borrowers got liquidated, the emergency changes to the protocol’s risk parameters were put up for voting as we are reading in the maker news today.

The borrowers on Maker with open CDPs and vaults found themselves on the wrong side of the unstable market and millions of dollars in collateral were auctioned for $0. The Ethereum network congestion reached its highest level since 2018 and as a result, Maker flash crashed and received only a few bids while some other parties did nothing for the collateral and paid only a small transaction fee.

The Liquidators ended up pulling 100 percent from the collateral of the CDPs and Vaults even though they were supposed to sell more collateral to bring the loan’s collateralization ratio back to the initial 150% threshold. This initiated an almost instant discussion amongst the MakerDAO and other stablecoins on the forum so an executive vote to alter the certain risk parameters is in play. According to the new executive proposal, the stability fee for SAI is now reduced to 7.5 percent from the recent 9.5% as well as reducing the DAI from 8% to 4%. The stability fees accrued from minting DAI funds and savings so that the new yield will match the new stability fee of 4 percent.

The Debt levels on DAI and SAI are reduced to 100 million and 25 million so the auction times and delays can fix the loans which have been pushed further allowing a lot of the individuals to correct their collateralization ratio before it is officially delegated to the liquidators. Many of the borrowers that are trying to add more collateral to the loans and were unable to do so since the network faced major congestion. The $0 bids winning collateral auctions made the borrowers unable to add more to their loans both boil down to the network congestion issues. This doesn’t mean that Maker Is not complicit of course.

Maker liquidators are not really supposed to fully seize the collateral and liquidate it but they should have enough to fix the collateralization ratio. The reason for this decision, however, is rather unknown.