Thursday morning UTC, the cryptocurrency market crashed violently, causing the prices of major currencies such as Bitcoin (BTC) and Ether (ETH) to fall more than 10%.
When traders rush out, the price of the stable currency usually rises as the demand for stability increases. However, in today’s crash, the impact is particularly pronounced on Dai (DAI), which traded short at $ 1.3 from 7 a.m. to 8 p.m. UTC.
In particular, DAI traded only at this overvalued value of Coinbase and Uniswap, while other exchanges, including Kraken and Bitfinex, appear to have maintained a relatively stable price.
Coinbase and Uniswap are two exchanges where Oracle uses the open stream of prices for the ship. The first serves as a base, and the second is used for validation and binding. However, Uniswap did not seem to be up to the task and also received a much higher price tag than usual.
The liquidation of the pool this morning was $ 89 million, of which around $ 52 million came from DAI, according to DuneAnalytics.
One of the liquidations is especially known for its huge amount of 46 million Kuwaiti dinars that were paid out.
As explained by DeFi researcher Sam Priestley, this settlement took place on delivered COMP farms that used US dollars (USDC) and DAI as collateral to support recursive loans in the same currency. The apparent increase in the DAI price drove the account below the settlement threshold.
The liquidator seized around $ 2.4 billion worth almost $ 50 million at a cost of $ 0.0209, while only $ 46 million was returned in the form of DAI. This is expected behavior given the current 8% incentive to disconnect.
The transaction involved the use of Uniswap flash swapping and calling to update Oracle Compound. Four other agreements, executed by the same liquidator, removed $ 6 million in debt.
The event highlighted the dangers of relying on multiple oracle data points, Chainlink (LINK) founder Sergei Nazarov told the Cointelegraph. “We have been expecting this heavy use of dashboards and poor data quality for over a year,” he said, referring to his explanation of the risks of using a single switchboard. He continued:
“DeFi protocols, based on a central oracle that retrieves data from individual exchanges, DEXs, or otherwise inadvertently threaten users’ money. Hundreds of exchanges to ensure that we get the real price of cryptocurrencies with adequate market coverage. ”
Although there is no evidence of active manipulation, it may lead to suspicions that the price of DAI rose sharply on the stock exchanges used by Oracle. Overall, the filtering complements recent rapid loan hacks to highlight Defi’s excessive reliance on multiple data sources such as oracles, Nazarov concluded.