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The MakerDao represents all that’s good about  Decentralized Finance or so we thought.  The MakerDao is by far the biggest blockchain Credit Facility in existence. In fact, according to new stories, on March 12th, 2020 there were over 683 million dollars in Ethereum deposited in the MakerDao, a Credit Facility on the Ethereum Blockchain. But on that terrible day the MakerDao would fail it’s investors and 4 million dollars in Ethereum would be lost. 

This is what I think happened based on the many stories written by the event. Ethereum is a very successful blockchain and is the name most Famous companies think of when they decide to run smart contract applications. But many of us know that Ethereum is a victim of its own success. When business is booming on Ethereum it quickly reaches close to its maximal transactional capacitance. When Ethereum runs out of transactional capacity, transactions are delayed, minutes, hours and even a day. When transactions executing smart contract code stop being executed. The smart contract systems start to fail. 

On March 12th, 2020 the price of Bitcoin dropped from $9000 to $4000 and the Altcoins like Ethereum followed, shedding 50% of their value in one day. There are no market stops in cryptocurrency. So many of the collateralized debt positions on Ethereum which were over Capitalized when Ethereum was $200, were suddenly under capitalized debt positions when Ethereum  hit $100. Once these CDPs were under capitalized. The smart contracts liquidated them, but not on the open market, but through auctions. 
The collateral for these Ethereum based CDP was suppose to auctioned off just enough to bring collateral to debt rations to > 150%. 

Normally smart contract liquidation on the MakerDao of the Ethereum is auctioned off in a competitive bidding process that normally results in the best, or  highest possible price for liquidated Ethereum. But there was one huge problem.  On this busy day Ethereum reaches its transactional per second maximum and transactions were delayed hours. And bids are transactions. 

Ethereum reaches its transactional capacitance and the transactions that represented bids stopped coming. It was then that smart human bidders noticed fewer and fewer bids making it through the transaction process. So the bidders did what any smart business person would do... in the absence of competing bids they bid very low. Sometimes zero dollars on accounts containing hundreds and even thousands of Ethereum. And they won. They were awarded entire vaults of Ethereum for very low bids, including bids of zero. It was unbelievable and yet it was very believable. 

Later, after the smoke cleared Investors signed into their accounts expecting to have lost 50% of the Ethereum plus a liquidation charge of 13 percent. But instead they  found that their accounts were at zero. Instead of competitive bidding the congestion on the Ethereum blockchain resulted in singular bids of zero dollars and because they were unopposed, the bids were executed. 

Smart Contracts aren’t smart, but they are dependable. They sold to the highest bidder in an attempt to recover funds. But with zero dollar bids they liquidated not some but all the Ethereum in each account. They did exactly what they were programmed to do. They don’t think they execute. That’s why we love them and that’s why we fear them.  But the real problem wasn’t the smart contracts. The Ethereum blockchain couldn’t handle the volume of transactions. Investors lost over 4 millions dollars US. 

The blockchain smart contracts champion Ethereum is world famous. It’s place in history is assured. Multiple solutions have been proposed to deal with this known problem, but with decentralized governance change is slow and the process is deliberate. Meanwhile investors who depend on the Champion, Ethereum are at risk. 

Meanwhile, back on the Tron blockchain a group of developers sees an opportunity to seize the moment to announce completion of their own version of the MakerDao. But with one important difference. It’s on a DPOS blockchain with over 1000 times as much transactional capacity as Ethereum maximum capacity, and it can scale up to meet greater demand. 

Coincidentally on that very day eight different internet news agencies report the operational status of the DJED credit facility. The one unifying theme of their reporting is that DJED is a clone of single collateral MakerDao!
It’s a clone of the Champion MakerDao on a faster blockchain. One that promises faster and cheaper transactions. 

The MakerDao gets wrecked due to transactional issues on the Ethereum Blockchain and investors lose their entire investments. Then the opening of a new Makerdao occurs. DJED rose like a Phoenix from the ashes of the Ethereum Meltdown. The great Steven Speilburg  must have written this movie. It’s a great business plan by Justin Sun and the Tron  Foundation. 

Let’s be honest here it’s a display of great timing. Plus the News stories which sound like they are attacking Justin Sun for a lack of creativity because they say the code for DJED looks exactly like the code for the MakerDao actually provide positive reassurance to investors scared of losing money on the original MakerDao because of the problems on the Ethereum blockchain.  They can invest in its exact clone on a faster blockchain. 

Anyone who doesn’t think this is a great strategy probably isn’t being honest with themselves and refuses to recognize good planning and good press. The press may not realize that those investors may want exactly this: a MakerDao clone on a faster blockchain. Or maybe they do and this is all part of a plan.

If I was a conspiracy theorist or a cynic I might even say that maybe the press does know and that’s why they are all writing the same thing: MakerDao clone to influence investors to move their MakerDao business to Djed. 

Now your probably thinking that it won't influence many of them, but if you think about it, since the MakerDao had 683 million dollars worth of Ethereum deposited there if only 1% of the investors move, thats 6.83 million dollars worth of Ethereum moving to a new platform. Additionally, the MakerDao does almost 2 billion dollars in transactional volume a month. If only 1% of those transactions moved to Djed thats 10 million dollars in transactional volume per month. I would say thats a pretty successful month for a brand new business. How many of you would be happy to have those numbers in your first month of business?

This sounds like the work of a smart business man, who surrounds himself with smart people, whose organization excels at getting lots of Publicity for his projects? Hmmm...I wonder who that could be? (Smile)

Stay informed my friends. 

✍️

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