Liquidation Auctions
When a Maker Vault's collateralization ratio drops below the minimum, it gets liquidated. But unlike TradFi margin calls, Maker uses Dutch auctions — the price starts high and drops until someone bites. This is how the protocol recovers its debt without relying on a central party.
Dutch Auction Simulator
Watch a Maker liquidation auction unfold. The price starts above market and decreases over time until a keeper bids. The faster the bid, the more premium the protocol captures.
Liquidation Pipeline
Oracle reports ETH price decline. Vault's collateralization ratio falls below the Liquidation Ratio (e.g., 150%).
Anyone can call Dog.bark() to flag the underwater vault. The caller receives a "tip" reward for initiating liquidation.
Clipper contract starts the auction. Price begins at a premium above oracle price and decreases over time via an exponential decay curve.
A keeper calls Clipper.take() when the price is attractive. They pay DAI and receive discounted collateral. Partial takes allowed.
Debt is repaid to the Maker system. The 13% penalty goes to the Surplus Buffer. Any leftover collateral returns to the vault owner.
Keeper Economics
Adjust parameters to see when it's profitable for a keeper to bid in a liquidation auction.