MakerDAO Governance Votes on Activation of the Liquidations System 2.0 Upgrade
DeFi lending and stablecoin protocol MarkerDAO has revealed that its liquidations 2.0 upgrade executive vote is now live. The upgrade to the platform’s liquidations system, if ratified, should improve system efficiency and help safeguard Dai’s stability.
As per MarkerDao’s official blog post published on April 19, the proposal will implement Maker Improvement Proposal 45 (MIP45) in a move that should restructure the current liquidations system on the network. The upgrade has been a year in the making and comes after a great deal of community support and feedback.
Focusing on Improvements
The team noted that the liquidations 2.0 upgrade marks the last significant functional and technical contribution the Foundation team will make to the protocol as it edges closer towards complete decentralization.
The latest governance vote comes about seven months after the DAO community voted to upgrade the liquidations system to integrate several vital changes such as “risk parameter” adjustments.
That initial upgrade made in September 2020 enabled Dai to maintain its soft peg to the dollar. The move helped protect the protocol from an event similar to the infamous “Black Thursday” market crash, where over $4M Dai was liquidated.
MarkerDAO’s Push Towards Full Decentralization
The MakerDAO community has long held on to the ethos of decentralization on which the protocol is founded. The proposed implementation of MIP45 will help push the protocol towards full decentralization and community governance.
The MarkerDAO team highlighted some of the key benefits that warrant the upgrade. For one, the new liquidations 2.0 would introduce multi-asset collateral and result in a substantial increase in the amount of Dai in circulation.
The upgrade also ensures that Maker’s auction system can scale with Dai generation, where the initial asking price is high and then decreases deterministically over time.
The overhaul of the auction model is crucial since the amount of Dai in existence has shot up twenty-fold in the last 12 months alone. The system upgrade would ensure that the protocol can handle liquidations at the scale the current elevated Dai adoption levels require.
Additionally, the proposed liquidations system would build on the improvements made during past upgrades, offering the DeFi project enhanced security, predictability, and decentralization. These improvements are expected to facilitate broader, less expensive, and more flexible participation by the MakerDAO community and enrich the larger DeFi ecosystem.
Other benefits that warrant the change include support for flash loans to facilitate more open and capital-efficient participation, acceptance of partial bids, and potential DEX and aggregator integration.
MKR Price Jumps Nearly 100% In A Week
Momentum for MKR has been mounting in recent weeks as the community anticipated the current vote to drive the protocol closer towards complete decentralization. Data from TradingView shows that the price of MKR rallied by almost 100% last week to set a new lifetime high at $4,096 on April 15.
The MarkerDAO community has shown overwhelming support for the liquidations system upgrade. So far, over 4,200 MKR are already pledged in favor of the MIP45 proposal. MKR holders can vote at http://vote.makerdao.com.