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Non-performing loan crisis averted! MKR auction successfully concluded, with crypto venture firm Paradigm emerging as the biggest winner

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Non-performing loan crisis averted! MKR auction successfully concluded, with crypto venture firm Paradigm emerging as the biggest winner

The MKR auction ended on March 28, with the Maker Foundation successfully resolving a debt crisis of approximately $4.5 million. Cryptocurrency venture capital firm Paradigm emerged as the biggest winner in this series of MKR token auctions.

  • Paradigm won 72 out of 106 auctions
  • The Maker Foundation raised 5.3 million DAI tokens

Non-Performing Loan Crisis Averted

As mentioned earlier, the auction was initiated due to certain liquidators winning collateral auctions at 0 DAI during the price crash on March 12, resulting in a financial deficit of approximately 4.5 million USD in the system.

MakerDAO decided on March 17 to include stablecoin USDC as one of the collateral options to reduce the liquidity risk of DAI in the market.

The auction ran from March 19 to March 28, during which the Maker Foundation raised 5.3 million DAI stablecoins, sold 20,980 MKR governance tokens at an average price of 279.93 USD each to 36 bidders.

Source: duneanalytics

Questioning Fairness

A total of 106 auctions were held during the period. The auction rules were set according to the MKR whitepaper, with a base price of 50,000 DAI / 250 MKR, open to all users but requiring participation in the auction process with open-source software Auction Keeper.

Although the auction has concluded, blockchain media outlet The Block has raised questions about its fairness, noting that the first 33 MKR auctions seemed to be won by three addresses associated with the MakerDAO Foundation. The Maker Foundation explained:

We did not buy the MKR tokens ourselves but helped third parties participate in the auction. The Maker Foundation provided some technical support to certain bidders on a "first come, first served" basis to assist them in participating in the auction promptly.

These three addresses ultimately won approximately 14,295 MKR governance tokens. The Block speculates that these addresses likely belong to Paradigm. The organization stated on Twitter that out of the 106 auctions, they won 72, with a bidding rate exceeding 68% and prices ranging from 180 to 250 MKR, totaling 3.6 million DAI.

In fact, back in December last year, Paradigm and crypto investment firm Dragonfly Capital invested 27.5 million USD in the Maker Foundation, acquiring approximately 5.5% of the total MKR supply. With the conclusion of this auction, Paradigm's stake in governance tokens will increase once again.