Black Thursday Liquidity Crunch
Code: NT-110
Tags: #markets #defi #risk
Language: en
Situation Report
COVID-19 panic hit crypto alongside TradFi: BTC fell ~50% in a day, and gas prices spiked above 200 gwei. MakerDAO auctions malfunctioned, letting zero-bid keepers scoop collateral as oracles lagged.
Architecture Notes
Defi protocols depended on Chainlink and Maker oracles that could not update fast enough under congestion. Liquidation bots needed ETH to pay gas, but collateral locked inside the system limited their ability to react.
Operational Impact
Maker executed emergency debt auctions and proposed USDC collateral onboardings to patch the deficit. Centralized exchanges throttled APIs, and OTC desks resorted to phone trades because electronic systems were overwhelmed.
Forward Watch
Risk teams prioritized circuit breakers, keeper-of-last-resort designs, and multi-collateral diversification to prevent another cascading liquidation loop.