Crypto venture firm Paradigm has obtained $3.6 million worth of MKR tokens in the recently held auction by Maker.
The decentralized finance (DeFi) company organized the auction between March 19 and March 28 to cover around $4.5 million of undercapitalized debt incurred due to the sudden price plunge of Ethereum last month.
Paradigm was the high bid in 72 of 106 auctions (~68%), returning 3.6M DAI to the system.
Congratulations to the Maker community on a successful auction process. https://t.co/HGnR04A4di
— Paradigm (@paradigm) March 30, 2020
The company raised a total of 5.3 million DAI and Paradigm obtained almost 68 percent of the total sold tokens.
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Issued by MakerDAO, DAI is a stablecoin soft pegged to the US dollar, while MKR is the protocol’s governance token. In the auction, the company sold a total of 20,980 MKR at an average price of $296.35 apiece.
In the 10-day long auction, 36 unique bidders participated in a total of 106 auctions. Paradigm won 72 of those auctions with its high bids.
Notably, Paradigm is also an investor in the project as it along with Dragonfly Capital invested $27.5 million in the non-profit, thus obtaining 5.5 percent of the total MKR supply.
The markets risks of crypto
Maker maintains minimum collateral of 150 percent in Ether for all the issued loans.
The woes of the DeFi platform started on March 12 as the value of Ethereum plunged over 30 percent in merely an hour. The steep plunge also defied the protocol’s market risk management mechanisms, putting it in grave risk.
The decision of auction was taken after the stakeholders of the project evaluated the possibilities of a shut down of the protocol.
“An emergency shutdown (not happening now) would cause DAI holders to take a haircut, whereas the social contract of MakerDAO is that MKR tokens take a haircut in the event of system failure,” Ryan Berckmans, an Ethereum developer, said in a response call before. “Therefore we should try and ensure that MKR holders take a hair cut by avoiding emergency shutdown if possible.”