- MakerDAO has launched Spark Protocol, a DAI-focused DeFi system for supplying and borrowing crypto, with a tokenized version of DAI deposited at the DAI savings rate called sDAI.
- Spark Protocol is connected to Maker’s D3M and uses a Pin Stability Module (PSM) that connects the liquidity infrastructure for instant exchange of DAI and sDAI for USDC.
- MakerDAO’s goal is to make DAI a floating asset, initially collateralized by real-world assets (RWA), and increase the proportion of decentralized collateral in its Endgame plan.
Yesterday May 8, 2023, MakerDAO, the decentralized finance (DeFi) pioneer, announced the launch of its new lending and lending system called Spark Protocol, which focuses on Maker’s native stablecoin, DAI.
Spark Protocol is described as an end-user DAI-centric DeFi product implemented on the Ethereum blockchain. The platform offers a variety of supply and lending functionalities for Ethereum (ETH), stETH (ETH staked on Lido), DAI, and sDAI.
Spark Lend, the first product of the protocol
The first product of the protocol is Spark Lend, which focuses on lending and borrowing cryptocurrency using DAI, Maker’s native stablecoin.
Users can interact directly with the Spark front-end and connect Maker liquidity with a complete DeFi solution.
Spark Lend also features a tokenized version of DAI deposited at the DAI savings rate called sDAI. However, the yields are currently low, with just 1.1% on offer for DAI deposits.
The protocol is connected to Maker’s D3M, a liquidity balancing system that uses DAI to maintain liquidity in Spark Lend. Furthermore, it uses a Pin Stability Module (PSM) that connects the liquidity infrastructure for instant exchange of DAI and sDAI for USDC.
Spark Protocol is part of MakerDAO’s Endgame plan, which aims to make DAI a floating asset initially collateralized by real world assets (RWA). Under the Endgame plan, DAI will remain pegged to the dollar for three years. MakerDAO plans to accumulate as much Ethereum (ETH) as possible to increase the proportion of decentralized collateral.
DAI and MKR
DAI is currently the fourth largest stablecoin in the DeFi market, with a circulating supply of $4.7 billion and a 3.6% market share. The supply of DAI has declined by 53% since its peak of nearly $10 billion in February 2022.
MakerDAO’s native token MKR is down about 2% on the day to $671 as crypto markets pull back. MKR 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. However, there are only just over 900,000 MKR in circulation, so the price of MKR could increase if demand for the token grows and, at the same time, the cryptocurrency market goes along with the rise.