65% Vote For ‘Zero Compensation’ For MakerDAO Vault Owners Who Lost $8M On Black Thursday Crash

  • MakerDAO votes against compensating vault owners following the Black Thursday crash in March of this year.
  • Over 65% of the votes cast opted for zero compensation.

A vote completed on Sept. 22 after two weeks of community participation, MakerDAO protocol, a decentralized lending platform, decided not to compensate vault owners who lost up to $8.83 million in the Black Thursday crash on March 12.

MakerDAO raised a vote in August to decide whether the wipeout on March 12 constituted a refundable action and what means of payment would be most applicable. In the just-completed vote, over 65% of the 87,899.67 MKR (8.4% participation) votes cast opted for zero compensation in both MKR and DAI tokens.

Only 18% and 15% of the remaining votes wanted partial compensation of the vault owners in MKR and DAI stablecoin. According to the MakerDAO protocol rules, 1 MKR represents one vote. Despite the decentralization, the pool of voters was still short – with only 38 unique voters participating – highlighting the overall issues facing DeFi governance at the moment.

During the March 12 market crash, Ethereum (ETH) – the most popular collateralization asset on Maker – dipped heavily to sub-$90 levels. Vault owners who stake their collateral in Maker to mint DAI stablecoin saw their overall collateral value dip as ETH crashed, causing under-collateralization. In effect, vault owners should be liquidated at $100, but the protocol’s oracles did not reflect the price causing some of the auctions of DAI to be executed.

Some orders as low as 0 ETH for DAI were executed, causing an $8 million wipeout for the vault owners who carried the burden of the collapse. The collapse caused a $4 million debt hole in Maker’s protocol leading to the very first debt auction in the decentralized finance industry.

The decentralized vote on Maker is the final nail on the coffin for vault owners who pushed for compensation through newly minted DAI or MKR tokens. However, the result of the vote shows MKR holders were not of the idea of diluting their MKR tokens by adding supply to repay the vault providers.

With the vote completed, MakerDAO is still fighting its battle in court with a $28 million class lawsuit opened over the Black Thursday meltdown.

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