MakerDAO Continues Stablecoin Race With Spark Protocol Launch

Key Points:

• MakerDAO has implemented the mainnet of Spark Protocol.
• It is a lending product branch developed by MakerDAO, with the first version called Spark Lend.

MakerDAO has officially released the newest update to be competitive in the stablecoin competition, this time via the Spark Protocol lending product arm.

MakerDAO and its DAI stablecoin are identical, however, the DAO has never explicitly enabled front-end access to the offering. Third-party companies like as Oasis, DeFi Saver, and Instadapp have instead developed user-facing solutions.

With the advent of Spark Protocol, customers will have access to a wholesale DAI credit line directly injected from Maker.

MakerDAO’s Spark Protocol is a lending product branch, with the initial version dubbed Spark Lend. In the future, the initiative is anticipated to assist stablecoin DAI in being more extensively adopted in DeFi ecosystems.

According to Sam McPherson, co-founder of Phoenix Labs, a research and development business that designed the protocol’s smart contracts and front end, MakerDAO will initially control the product, which will subsequently be spun off into its own sub-DAO.

The product will be officially available on the Ethereum mainnet on May 9. This product supports popular user assets like as ETH, stETH, DAI, and sDAI.

Spark Lend and its corresponding front-end interface are the two components of the product.

Both the smart contracts and the front-end were built using Aave’s open-source software, which was then tailored to concentrate on DAI rather than a general-purpose borrowing and lending market.

Spark, unlike Aave, will feature a bespoke interest rate mechanism that is not affected by usage — supply, and demand. Instead, the rate is determined by governance and stays constant regardless of how many users access liquidity, up to a debt maximum set by governance.

With D3M liquidity and interest rate support, customers may borrow DAI at a set threshold of 1.11% (year on year) without being influenced by the loan capital usage ratio. (Rate of use).

The sDAI token version is another distinction in Spark Lend this time. Since it is a yield-bearing token, any earnings generated by DAI Saving Rates will be distributed to sDAI holders.

The PSM (Peg Stability Module) liquidity pool will also be included in the Spark Protocol. As a result, DAI and sDAI from this loan platform may be readily traded for USDC to help stabilize the exchange rate if it fluctuates.

Lastly, rather than the Chronicle price feeds utilized by Maker’s Oracle Safety Module, Spark Protocol uses Chainlink oracles.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your research before investing.

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Harold

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