The leading decentralized finance (DeFi) innovator, MakerDAO, has introduced a new lending and borrowing system called Spark Protocol.
The platform, which was launched on May 9, is an end-user DeFi product centered around DAI, Maker’s native stablecoin, and deployed on the Ethereum blockchain. Spark Protocol offers supply and borrow functionalities for ETH, stETH (Lido staked ETH), DAI, and sDAI.
Spark Lend, the protocol’s first product, is a marketplace focused on lending and borrowing crypto using DAI. MakerDAO has stated that users will be able to interact with Spark’s front-end directly, connecting Maker’s liquidity with a complete DeFi solution.
Spark Lend also introduces sDAI, a tokenized version of DAI deposited in the DSR (DAI Savings Rate) that provides lower yields, currently offering just 1.1% on DAI deposits.
The protocol is connected to Maker’s D3M liquidity balancing system, which uses DAI to keep liquidity in Spark Lend. Additionally, it employs a Peg Stability Module (PSM) that connects the liquidity infrastructure for instant swapping of DAI and sDAI for USDC.
Stability, liquidity, and lower risks have become the way forward for Maker as DeFi users grow wary of unsustainable yield promises and high risk. Spark Protocol is part of MakerDAO’s Endgame plan to make DAI a free-floating asset collateralized by real-world assets (RWA).
Under the plan, DAI will remain pegged to the dollar for three years, and Maker aims to accumulate as much Ethereum (ETH) as possible to ultimately increase the ratio of decentralized collateral.
DAI is currently the largest decentralized stablecoin, with a circulating supply of $4.7 billion and a market share of 3.6%. MakerDAO’s native token, MKR, has dropped around 2% on the day and is currently trading at its lowest level for just over a month. The DeFi governance token is down 89% from its May 2021 all-time high of $6,292, with just over 900,000 MKR in circulation.
Also Read: MakerDAO Issues Emergency Proposal to Mitigate $3.1B USDC Risk
