What occurred in March 2020 in terms of the crypto-world was anything but a good day. The Ethereum prices hit substantial lows (nearly half of their value), which resulted in many customers not having enough collateral for what they borrowed from the network.
MakerDao has a protocol at this stage that allows “keepers” to move in and buy the ETH or BAT, and to close the loan. It usually transfers a portion of their initial equity back to the original creditor and they are charged with other fines as a liquidation penalty. The reason that people benefit from liquidating those who fall into this category has been that the liquidator collects for their services a portion of the charge.
All in all, the system had continued to function as it would up to this time and it was unfortunate but true if you find yourself in a position where you were liquidated. This time around things was much more different as high gas costs and a massive rise in use on the Ethereum network prompted many of the “keepers” not to participate in the liquidation auctions. What this allowed for were auctions to be purchased for $0 and the vaults to not receive anything back from their original collateral. Many people lost everything.
In the case of Matrixport.com and their Zero Cost loan, customers can get a USDC loan with no interest and their collateral will NOT be liquidized regardless of the current price of the market. The loans themselves can be entirely customized with the LTV, the take-profit price and the loan tenor which can all be modified to accommodate the client’s needs. There is no risk of liquidation, so users can enjoy secured investments with their collateral. In addition, it is also endorsed by Bitmain, which adds a significant amount of prestige as the mining juggernaut carries both a wealth of technical and capital expertise.
The distinction between the two systems is that the end-user is the one that was most affected in the case of MakerDao and it saw a huge portion of its members losing something in the blink of an eye. In the case that there is a price meltdown, such was the case here, Matrixport mitigates the risk and does not require clients to repay loans. Unless the same situation as what happened with MakerDao were to arise in the case of Matrixport and the market took a massive drop, there would be no need to call in the spreads and the collateral would never be liquidated. The potential loss from the drop in BTC price would be borne by the company and not the valued user. On top of this, Matrixport creates a flexible investment experience for its clients with its fully-customizable products.