A governance vote took place on Tuesday and supported the decision that the vault owners who had been affected by the ‘Black Thursday’ crash in March will not be compensated. During Black Thursday, MakerDAO vault holders had lost a whopping $2.5 million and following the governance vote which ended on Tuesday, they will not be getting any compensation for the same.
The DeFi market has sped past everyone’s expectations. The total value locked in the system is exceeding benchmarks every day, but what happened earlier in the year with MakerDAO still continues to question the building grounds and rudimentary concepts of DeFi. The governance poll for MakerDAO affected the vault owners in a big way during the Black Thursday market crash in mid-March. As per the reports, 65% of the participants voted against the vault holders receiving any form of compensation for the $2.5 million losses incurred by them.
Black Thursday will be recounted as one of the worst days for the market. The Bitcoin price crashed badly and coincidentally it was also one of the worst equity markets in 33 years! The Dow Jones saw a downward plummet of nearly 10% during trading, S&P 500 lost 9.51% and so did NASDAQ 9.43%. Spot Gold value also declined by 4% but needless to mention Bitcoin was crowned as the biggest loser of them all with its price driving down by over 40% in less than 24 hours!
Following a price crash of more than $1500 in one hour, Bitcoin price became steady around the figure $6000 in the next few hours until the Asian Markets woke up to the new reality check. So, this further crashed the prospects of Bitcoin regaining some lost ground when it plummeted further below to a nothingness of $4266 on Bitmex. That day, there were also many discernible discrepancies between the prices of Bitcoin on different crypto exchanges. At one point there was a $400 spread between the prices on BitMEX and Coinbase.
Social Media reaction pointed to the decision to not compensate as not an ideal way to set precedent. MKR holders assumedly remained unaffected by the forced liquidations on March 12th Thursday making only vault owners the real affected in this. Across the market, panic set on that Thursday and a major sell-off of tokens took place declining the price of them. Fear of the ever-increasing pandemic triggered investors to liquidate their assets for cash to survive the pandemic.
MakerDAO also suffered the consequences of that day. When the price of ETH fell the network suffered a huge congestion that presented price oracles from updating ETH/USD price in real-time. This lack of update forced uncollateralized vault owners to liquidate. Users also took advantage of the situation with zero and half bids. They were able to liquidate ETH from vault owners with little or no DAI in collateral. It lost $6.65 million in DAI in the dark stint. It also registered a $4 million bad debt which it was able to service in a debt auction a few weeks later.