Source
r/MakerDAO•
MusaTheRedGuard

A Simple guide to MakerDAO SCD shutdown

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Disclaimer: I'm just a community member trying to be helpful, this isn’t an official statement from the Maker Foundation, all this is at your own risk, not financial advice, etc, etc

What's happening?

  • MKR governance has decided to shut down Single Collateral DAI.

  • This is the version of the Dai Stablecoin System that had CDPs and ETH only collateral.

Why is this happening?

  • There are various liquidation and stability issues within SCD that came dangerously close to causing major breakdowns in SCD, especially during the crash of March 12th.

  • More detailed explanation here.

  • MKR holders voted to shut down SCD gracefully to protect SAI and CDP owners.

  • MKR governance is currently managing two systems simultaneously which is causing additional governance overhead.

I own a CDP, what should I do?

Option 1: Upgrade to Multi Collateral DAI

  • CDP owners can upgrade to Multi-Collateral DAI using the Maker Migration tool: https://migrate.makerdao.com. This is the only official migration tool. WARNING: THERE IS NO OTHER MIGRATION TOOL.

  • When upgrading, CDP owners will have to pay off their stability fee. See the ‘How Should I pay my Stability Fee’ section below. It is strongly recommended CDP owners have enough MKR tokens to pay off their accrued stability fee.

  • MKR tokens are available on DEXes such as Uniswap, Kyberswap or 1inch

Option 2: Wait for Single Collateral Dai Shutdown

  • When SCD is shutdown, the price of ETH at shutdown will be frozen.

  • CDP owners will then be able to claim a proportional amount of ETH collateral from the collateral pool.

  • The Maker Foundation will be providing a UI to facilitate this process.

I own a CDP and I don’t want to upgrade to MCD, what should I do?

  • CDP owners that don’t want to upgrade to Multi-Collateral DAI can close their CDPs using the official CDP portal: https://cdp.makerdao.com/

  • It is strongly recommended CDP owners have enough MKR tokens to pay off their accrued stability fee.

  • MKR tokens are available on DEXes such as Uniswap, Kyberswap or 1inch

How Should I pay my Stability Fee?

  • The Maker Migration tool allows users to purchase MKR to pay off their Stability Fee and complete the migration. Remember, THERE IS NO OTHER MIGRATION TOOL, apart from https://migrate.makerdao.com

  • It facilitates this by sourcing liquidity from market makers on OasisTrade.

  • Unfortunately at the moment, liquidity is very thin. The migration tool therefore enforces a 5% slippage limit to protect users.

  • Because of low liquidity, it is strongly recommended that users source MKR liquidity on DEXes such as Uniswap, Kyberswap or 1inch to pay their fee. Be very careful with slippage.

I own SAI tokens, what should I do?

Option 1: Sell your SAI to DAI/USDC/ETH

  • You can sell your SAI to another cryptocurrency using DEXes like Uniswap, Kyberswap or 1inch

  • DAI is currently trading at $1.02 so there’s some risk of slippage

Option 2: Wait for SCD shutdown

  • When SCD is shutdown, SAI holders will be able to exchange SAI for $1 worth of ETH at the time of shutdown.

  • This means that if the price of ETH falls after shutdown, SAI holders may get less than $1 worth of ETH at the current price. As a corollary, if the price of ETH rises after shutdown, SAI holders may receive greater than $1 worth of ETH.

  • The Maker Foundation will be providing a UI to facilitate this process.

I own SAI on Compound

Posted Apr 17, 2020, 5:14 PM UTC · edited

3130
dericecourcy•

Please excuse my ignorance, I don't know everything I could about the Maker system. Is it possible that any of the things outlined here could change before the shutdown actually occurs? Maybe by another vote?

5
MusaTheRedGuardOP•

The vast majority of what's in here will stay the same. Of course, this is crypto so never say never but the chance of a major change happening is pretty small, in my opinion.

What change are you thinking about?

4
dericecourcy•

I'm not sure really... I was just thinking about the effects of fixing a SAI/ETH price. Are there any liabilities the system could face if the price of ETH (and thus the fixed price of SAI) went down enough?

1
dericecourcy•

Is there even any possible way to change this fixed price after setting it? Or is there something in the code of the smart contract that would prevent this?

1
MusaTheRedGuardOP•

So under "I own SAI tokens, what should I do?" Option 2 goes over it a little.

This means that if the price of ETH falls after shutdown, SAI holders may get less than $1 worth of ETH at the current price. As a corollary, if the price of ETH rises after shutdown, SAI holders may receive greater than $1 worth of ETH.

The main thing to know is, once SAI shutdown has been executed and the price has been frozen, SAI holders will begin to take on ETH price risk.

Let me know if that explains things

6
lehyde•

This was an informative and well-structured post. Thank you!

4
jimTurbos•

So is the https://migrate.makerdao.com still working? I have tried to use metamask and coinbase wallet on android and it says I have no SAI to migrate, but there is SAI in my wallet.

2
A_natta•

I had the same issue a few weeks back and had to use a desktop browser. I think it may be a coinbase wallet issue.

edit: desktop browser (formatting).

Update: " Since the Sai to Dai bridge on migrate.makerdao.com has been closed, Sai holders should consider trading their Sai for Dai via the open market (e.g., exchanges such as Uniswap and Kyber) before ES is triggered. Users who hold Sai after ES is triggered should be able to redeem collateral through an Emergency Shutdown Redemption user interface that the Maker Foundation will create. "
https://blog.makerdao.com/a-guide-to-single-collateral-dai-sai-shutdown/

2
MusaTheRedGuardOP•

Afaik, it should still be working. Are you trying to migrate a CDP?

1
Bingbongfly•

If I have a CDP with a key that I can't acces for a year.. whats my best course of action?

1
MusaTheRedGuardOP•

In general, if you fully lose access to your keys, there's not much that can be done. Do you have access to your seed phrase?

1
Bingbongfly•

What I meant was I have the keys and my seed phrase, but I won't get access to them until a year. Think of it like a timecapsule. What will happen to my cdp?

Thanks :)

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MusaTheRedGuardOP•

Aah OK cool. I believe you'll receive a proportional amount of ETH left in the collateral pool(that's not backing SAI).

So say you had a CDP with a 200% collateralization ratio. Half of it, 100%, is backing SAI by design. You'll be able to withdraw half of your collateral in that case

3
Bingbongfly•

Okey thanks. But this is only for sai right?

My CDP is open in defisaver, so its a MCD. So I can keep it open?

Thanks for your help mate

1
[deleted]•

[deleted]

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MusaTheRedGuardOP•

As far as I know, Maker governance is planning to forgive stability fees upon shutdown

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[deleted]•

[deleted]

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MusaTheRedGuardOP•

If people want to keep their leveraged positions, migrating is the best thing to do.

Another thing to note is that, afaik, maker has never done an emergency shutdown before.

So in my opinion, waiting till shutdown is taking on additional risk that shutdown goes well.

3
chillestchill•

If everything goes smoothly and fees are forgiven, will I still have to pay my total borrowed SAI before being allowed to remove my deposited ETH? I mentioned it in an older post but it still remains unclear. Thanks for this post Musa, it has been very helpful.

2
TotesMessenger•

I'm a bot, bleep, bloop. Someone has linked to this thread from another place on reddit:

 ^(If you follow any of the above links, please respect the rules of reddit and don't vote in the other threads.) ^(Info ^/ ^Contact)

1
wolfman333•

When is the shutdown taking place?

1
MusaTheRedGuardOP•

The shutdown process will begin on April 24th but there'll be a grace period between 24th and the actual call of the cage function

1
pixus_ru•

What do I need to do if I own some DAI from a year ago?

1
MusaTheRedGuardOP•

Depends, do you own DAI or SAI? If you own DAI, then you're fine, there's nothing to do.

If you own SAI, you can sell it for another cryptocurrency or wait for SCD shutdown

2
pixus_ru•

Yes, DAI. Exchanged when ETH started going down from 300.
Thank you.

2
nikola_j•

DAI from "a year ago" has been renamed to SAI.

The DAI as we know today has only been introduced in November 2019.

I suggest checking your wallet on Etherscan, for example, as it will show the balances with proper, updated names.

If your funds are on a centralized exchange, try to verify that it is indeed DAI. Many exchanges did the SAI->DAI conversion for their users on their own, so that may also be the case with your funds.

2
ChaseItOrMakeIt•

Holy fuck.... DAI was introduced in November 2019... Coronavirus started in November 2019... Coincidence?? I think not!?!?!?!

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[deleted]•

[removed]

1
gregor314•

Is this a fake site: <link removed> ?

EDIT: Link was removed to prevent further scams.

1
MusaTheRedGuardOP•

Yes. Only the official front ends should be used.

EDIT: you should probably also delete the comment or remove the link, don't want people to accidentally click on it

1
gregor314•

done

1
TheRatj•

Does this still need to be stickied?

1