Basically, by leveraging the controversial flash loan process, Bprotocol used an uncollaterized loan to borrow roughly million worth of MKR. With the requirement to vote with MKR, the flash loan made it so Bprotocol could influence the poll a great deal.
The Makerdao and the stablecoin DAI has been a popular project in the decentralized finance (defi) space and it’s also had its share of problems. This week the project called Bprotocol leveraged a defi flash loan in order to sway a Makerdao governance vote. The development team behind the Maker project aims to make it harder for problems like defi flash loans going forward.
“As promised, I’m providing an update now [that] the current hat exceeded 100k MKR,” Longforwisdom wrote. “As mentioned previously, the contents of this spell are as follows:
A few examples include the stablecoin having issues holding its peg, as there have been various votes held to address the issue. Then on March 12, 2020, otherwise known as ‘Black Thursday,’ the Maker project had major difficulties when the price of ETH crashed, as many Collateralized Debt Positions (CDP) were ravaged.
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This caused the Maker project to get sued in a class action lawsuit, which is still ongoing. This week the crypto community has been complaining about Makerdao’s recent governance ballot, which saw the Bprotocol project sway a Maker governance vote.
DAI is used on exchanges and is regularly used within the defi world on various applications like Compound, Uniswap, and Aave. The project has also seen a number of issues over the years and skeptics have questioned the integrity of the Makerdao protocol.
The flash loan has Maker community members concerned that a malicious governance attack could severely hurt the project. Increasing the MKR requirement and the deactivation of the two modules may only lead to a temporary bandage.
- A GSM pause delay increase from 12 hours to 72 hours.
- The Oracle Freeze Module (OsmMom) will be deauthorized.
- The Liquidations Freeze Module / Circuit Breaker (FlipperMom) will be deauthorized.”
Alongside this, crypto community members also wonder if other Ethereum-based defi governance protocols can be gamed by an uncollaterized flash loan.
The post Uncollaterized Power: A Makerdao Governance Vote Was Swayed by a Defi Flash Loan appeared first on Bitcoin News.
Another vote is taking place to tackle the issue, so it won’t happen again including raising the amount of MKR needed to apply governance stake. Makerdao’s governance coordinator, ‘Longforwisdom,’ and other community members conversed about the topic in a Maker forum discussion called: “Updates – Flash Loans and securing the Maker Protocol.”
Since the project’s inception, Makerdao, often referred to as Maker, has been a defi project that has seen a lot of demand. The Maker project is responsible for creating one of the first decentralized stablecoins called DAI, which leverages overcollateralization and oracles to hold a peg.
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