$5 Million in MakerDAO Loans Have Been Liquidated, But Help Is on the Way

It goes without saying that this comes with a considerable amount of risk to the user borrowing DAI, given that sudden drops in ether price may devalue collateral held within a CDP. Should the value of any contract fall below the minimum collateralization ratio of 1.5 ETH to DAI, the MakerDAO system will forcibly liquidate a user's CDP and sell all staked ether automatically at a 3 percent discount to cover outstanding DAI debt - all this on top of a 13 percent liquidation penalty.

At present, users must keep a careful eye on the value of their ETH collateral being stored within a CDP. If the user thinks that their CDP will fall below the minimum collateralization ratio, they can either lock up more collateral to boost up the ratio or simply close the CDP and pay back the full amount of their loan in DAI. CDP Saver dashboard.

Rather than wiping the entirety of their debt, users can partially "Unwind" their CDP through the CDP Saver.

The first step to unwinding a CDP is drawing an available surplus of ETH collateral and swapping it on a cryptocurrency exchange for DAI. Then, the newly converted DAI is used to repay a portion of owed CDP debt and thereby increase the collateralization ratio.

The CDP Saver also alternatively features a function called "Boost" to perform the exact reverse of repaying CDP debt.

"In the second iteration of CDP Saver, we will releasee the automatic CDP saving feature," said Palinkasevic.

To date, over 80 million DAI tokens have been liquidated, with one infamous CDP smart contract - CDP 3228 - being liquidated back in November 2018 for nearly 7 million DAI. At the time, this accounted for approximately 10 percent of the total DAI supply, according to MakerDAO community lead David Utrobin on Reddit.

To a growing user base of DAI holders, CDP management tools like the CDP Saver are just one of a myriad of third-party applications being built and released.

InstaDApp currently hosts a webpage called MakerScan where users can track CDPs, receive automated alerts about their activity, bolster collateral to CDPs by donating ETH, among other functions.

Similar in aim to Keydonix, one of the developers behind the CDP Liquidator David Terry explained the CDP Liquidator tool has "Never been launched on mainnet" and still requires "Significant work in polishing and auditing."