Proposed ‘Spark Protocol’ will leverage MakerDAO’s DAI stablecoin and its crypto assets for liquidity.
MakerDAO — a decentralized autonomous organization (DAO), is looking into creating a liquidity market for lending and borrowing crypto assets focused on DAI, Maker’s $5 billion stablecoin.
According to a proposal made by on Maker’s governance forum, Spark Protocol will “amplify the features of MakerDAO by enabling a liquidity market for supplying and borrowing scalable crypto assets with variable and fixed rates, supporting EtherDAI, and implementing the first resilient oracles to improve Maker’s strength.”
Maker has the cheapest credit in DeFi because there is no requirement for third-party liquidity providers. Hence, Spark will allow anyone to borrow DAI at the Dai Savings Rate (DSR), as stated in the Stability and Liquidity Framework, also available on the Maker community forum.
Spark Lend, the first product of the liquidity market, will support highly liquid decentralized assets as collateral, including DAI, ETH, Lido wstETH, WBTC, and Savings DAI. In the future, the liquidity market is proposed to include fixed-term yield products, as well as Maker’s synthetic liquid staking derivative (LSD) called EtherDAI.
Spark will use the Aave v3 smart contract system, in exchange, 10% of the protocol’s profits in the next two years will be sent to Aave DAO.
Spark will launch as soon as April, with the opening of a DAI lending vault. The Maker community is set to vote on the implementation of Spark Protocol.