MakerDAO, the DeFi pioneer, announced on May 8 that Spark Protocol would be released on May 9. The platform was billed as a DAI-centered end-user DeFi product built on Ethereum. It supports ETH, stETH (Lido staked ETH), DAI, and sDAI supply and borrows functions. Spark Lend is the protocol’s first offering. The marketplace focuses on crypto lending and borrowing via DAI, Maker’s native stablecoin.
MakerDAO stated on Twitter, “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). However, rates on DAI deposits are currently pitifully low, with only 1.1% on offer.
Maker’s D3M is also linked to Spark. DAI is used in this liquidity balancing method to keep liquidity in Spark Lend. Furthermore, it employs a Peg Stability Module (PSM) that connects the liquidity infrastructure enabling quick DAI and sDAI trading for USDC.
Although the rates are low, DeFi consumers have become leery of unsustainable yield promises and significant risk. As a result, Maker’s strategy has shifted to one of stability, liquidity, and decreased risk.
MakerDAO’s Endgame strategy includes the Spark Protocol. The protocol proposes that DAI be treated as a free-floating asset that is initially collateralized by real-world assets (RWA).
DAI will be fixed to the dollar for three years under the Endgame proposal. Maker intends to amass as much Ethereum (ETH) as feasible in order to eventually raise the percentage of decentralized collateral. With a circulating supply of $4.7 billion, DAI is now the fourth largest stablecoin. This gives it a market share of 3.6%, making it the largest decentralized stablecoin in the business
Furthermore, DAI supply has fallen by 53% from reaching a high of about $10 billion in February 2022. MakerDAO’s native token has fallen almost 2% on the day to $671 as crypto markets collapse. MKR is currently trading at its lowest point in nearly a month. The DeFi governance token is down 89% from its all-time high of $6,292 in May 2021. However, just slightly more than 900,000 MKR are in circulation.