A single bot exploited MakerDAO’s auction system on March 12, 2020, claiming $8.3M in ETH for free and leaving the protocol $4.5M in debt.
On March 12, 2020, a single automated bot walked away with $8.32 million worth of ETH. It paid nothing. The transaction was completely legal within the protocol’s own rules.
Crypto analyst marilyn100x.eth shared the story, calling it one of DeFi’s most consequential exploits. The event exposed a critical blind spot in how MakerDAO handled collateral liquidations.
How the MakerDAO Liquidation System Actually Worked
MakerDAO allowed users to lock ETH as collateral and borrow DAI against it.
The system required vaults to stay overcollateralized at all times. If ETH’s price dropped too far, a vault would trigger liquidation. At that point, the ETH collateral went up for auction.
Automated bots, known as keepers, would bid DAI to claim it. The highest bid covered the user’s debt. The protocol stayed solvent. This design worked well under normal conditions.
The key assumption behind the entire model was competition.
MakerDAO’s auction system relied on multiple keeper bots showing up and bidding against each other. Without that competition, the system had no floor. Nothing was stopping a bid of zero from winning.
On March 12, 2020, someone bought $8.32M worth of $ETH for $0.
How did that happen?
> MakerDAO lets you lock ETH as collateral and borrow $DAI against it.
> To keep the system solvent, your vault has to stay overcollateralized. If ETH drops too much, your vault gets… pic.twitter.com/3dsfsrgCKN— marilyn100x.eth (@marilyn100x) March 7, 2026
The Night ETH Dropped 43% and the Bots Went Silent
March 12, 2020 was not a normal day. ETH fell 43% in a matter of hours. Hundreds of vaults went underwater at the same time.
Every keeper bot on the network tried to submit bids simultaneously. Ethereum could not handle the sudden spike in traffic. Gas prices surged by 10 times in a short window.
Most keeper bots had fixed gas settings. Their transactions got stuck in the mempool. Auctions kept opening. Nobody was bidding. According to marilyn100x.eth’s account, this is the moment one bot recognized the gap and moved in.
That bot submitted a bid of 0 DAI. It waited for the auction timer to run out. No competing bids arrived. The auction closed. The bot received real ETH and paid absolutely nothing for it. It kept going.
For nearly 40 minutes, it swept auction after auction at the same price. Zero.
Related Reading: Crypto Liquidations Hit $374M as Bitcoin Swings Trigger Long Wipeout and Short Squeeze
The $4.5M Deficit That Changed DeFi Liquidation Design
When the dust settled, MakerDAO was sitting on $4.5 million in uncovered debt. The protocol had never run a deficit before that day.
With no other option, MKR token holders voted to mint new MKR and sell it on the open market to fill the gap. Every existing token holder got diluted to bail out the system.
The bot broke no rules. The smart contracts executed exactly as written. The auction ran its course correctly. The design simply had never accounted for a scenario where every participant got knocked out at once.
Marilyn100x.eth noted that the fallout from this single 40-minute window reshaped how liquidation systems get built in DeFi. Aave’s dynamic parameters, supply caps, and bot incentive structures all trace back to lessons learned from this event.
Developers across the space started designing for failure cases, not just normal conditions.
A $200 million protocol lost $4.5 million because of one unchecked assumption. The assumption that bots would always show up.
