Designing and Educating for Congestion

Today MakerDAO had some issues. Specifically, there were undercollateralized vaults being auctioned off for zero DAI. This was, the story goes, because of extreme network congestion. The “zero bids” simply had no competition.

Now, it seems to me that designing for network congestion is similar to designing for denial of service attacks. With time-sensitive financial operations on a public blockchain I can certainly understand how something like the auction mechanism design gets tricky very quickly.

I’m interested in discussing such designs in and of themselves - but that’s not the sole reason for this post.

It seems there must have been another, simultaneous, failure. That failure looks to be that there was a lack of information and accessible tooling for participating in collateral auctions.

If you were a developer (and so inclined), you could participate in the auctions by following the guides over here. (Note: the documentation itself lists the intended audience as developers.)

It seems that merely incentivizing participation with potential profits at the system level isn’t enough — the methods of participation need to be made more accessible to broader audiences.

Lend me your thoughts: To what extent can a lack of education and accessible interfaces for participation be considered a ĐApp security problem?


Good point. I have a Vault(Fortunately, NOT liquidated, but I had to wait for several hours to confirm my deposit tx for increasing collateral that day).

I have read many post related with this “Black Swan” event and many Vault owners lost their ETH. :roll_eyes:

Blockchain, Ethereum, De-fi and something like that seem likely to remain the province of a few enthusiast, developers, clever winning keeper and people here. I think broad public “participation” should be needed. Need more resources for plain people.

Well, it was gloomy Friday, anyway. Ethereum and MakerDAO lost many fans.

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Hi @CallMeGwei,

Thanks for starting this discussion.

There was a recent blog post on the Maker Blog about this:

Awareness, education and accessibility will be important if mechanisms require third party participation. Also providing fall backs in case third party participation either doesn’t happen or fails.

In addition, I think designs will need to take into account flash loans, price volatility and network congestion (among other things).

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Hi @CallMeGwei,

That’s a great observation! With increased accessibility to the collateral auction, MakerDAO should benefit from additional means to recover funds after vault liquidations.

More competition to bid on collateral should only increase the overall health and security of the system as it ensures MakerDAO’s ability to be made whole after vaults go into default.

To be honest, I think it could be inevitable that the Maker Foundation implement an interface that allows non-developers to act as keepers as it’s in the best interest of the system. This event should only emphasize its importance.

However, I can’t help but wonder if a collateral auction interface would be effectively competitive against custom-made auction keeper bots deployed by competing bidders.

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