MKR auctions conclude with crypto venture firm Paradigm emerging as the biggest winner

Quick Take

  • The MKR Debt Auctions concluded over the weekend with 20,980 MKR being sold for 5.3 million DAI
  • Crypto venture firm Paradigm won 68% of the 106 auctions, pocketing over 14,000 MKR
  • The Block found that the address associated with the Maker Foundation Trading Desk has sent 14,271 MKR to a new address likely associated with Paradigm.

Crypto venture firm Paradigm was the biggest winner in a series of MKR auctions intended to cover around $4.5 million of undercapitalized debt.

The auctions – which lasted between March 19 and March 28 – raised a total of 5.3 million DAI, the MakerDAO system's stablecoin that has a soft peg to the dollar. During the process, 20,980 MKR, the MakerDAO protocol's governance token, were sold at an average price of $296.35 apiece. Thirty-six unique bidders participated. 

A total of 106 auctions were conducted over the time period. To participate, each person committed to putting up 50,000 DAI with the chance to win up to 250 MKR from each auction. 

In a tweet, Paradigm said that it won 72 of the 106 auctions and paid a total of 3.6 million DAI for these governance tokens. 

As The Block previously reported, the first 33 MKR auctions all appeared to be won by the three addresses associated with the MakerDAO Foundation, the non-profit organization that helps maintain the Maker protocol. During an email interview last week, the Maker Foundation explained to The Block that it did not purchase MKR tokens for itself but rather helped third parties to participate in the auctions. 

"[The Maker Foundation] has offered limited technical assistance to some bidders on a first come, first serve basis to facilitate their timely and effective participation in the auctions," the Foundation told The Block at the time. 

In the subsequent auctions, the three addresses continued that winning spree and eventually won around 14,295 MKR, The Block's research shows. 

Interestingly, after the three addresses sent 14,295 MKR to the Foundation's trading desk address, the latter then transferred 14,271 MKR to a new address (7,089 MKR of which came to this new address from the foundation’s trading desk address via a multisig wallet). 

It is likely that the new address belongs to Paradigm, which should now have roughly 14,000 MKR from the auctions since it won 68% of them and each auction awarded between 180 and 250 MKR. 

When reached out for comment, Paradigm referred The Block to the tweet it posted earlier while the Maker Foundation has yet to reply. 

The newly-purchased MKR will add to Paradigm's existing position of the governance token, as another address associated with the venture firm holds around 15,352 MKR. In December last year, Paradigm and Dragonfly Capital invested $27.5 million in the foundation in exchange for around 5.5% of the total MKR token supply. 

The MKR auctions aimed to cover $4.5 million in bad debt in the Maker ecosystem, which was created after certain liquidators won collateral liquidation auctions with 0 DAI on March 12 (a day that has since been dubbed 'Black Thursday').

In the MakerDAO system, borrowers mint DAI by depositing ETH, BAT  or USDC as collateral. However, because of a steep drop in the price of ether on March 12, a significant number of loans fell below their required 150% collateralization threshold, triggering liquidation auctions.

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