MakerDAO, one of the largest decentralized autonomous organizations on the Ethereum blockchain, announced on Monday, May 8th, it is launching the Spark Protocol for its users. The lending solution will be available from May 9th. Its first version is specifically designed for Maker’s DAI stablecoin.
MakerDAO To Launch Spark Protocol on May 9th
This Monday, MakerDAO announced the launch of its Spark Protocol. In the Twitter thread, Maker describes Spark as a lending marketplace and explains that its first version has been specifically designed for the DAO’s DAI stablecoin. The protocol is intended to enhance the coin’s liquidity, and lending capability, and offer a yield-bearing version.
Maker also stated that Spark is connected to DAI’s D3M (Direct Deposit Dai Module) enabling it “direct wholesale credit line” and allowing it to automatically provide additional liquidity to Spark Lend. The DAO also stated that the interest rate will not be increasing with utilization and will have an initial annual rate of 1.11%.
The Spark Protocol is also connected to Maker’s PSM (Peg Stability Module) allowing for greater liquidity due to the instant both-way swapping of USDC for DAI and sDAI at a 1:1 rate. The Spark Protocol is set to become available to users on Tuesday, May 9th.
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MakerDAO’s Recent Enhancements
MakerDAO has recently made numerous decisions aimed at improving its ecosystem. Last October, it voted to move 33% of the $1.6 billion Peg Stability Module to Coinbase’s custody to help earn better yield. Additionally, in early 2023, it decided to transfer an additional $500 million USDC to the exchange after a landslide vote.
It also remained committed to its long-standing relationship with the exchange and the USDC stablecoin even after the recent regulatory turmoil surrounding Coinbase. In late March, it voted with a 79% majority to keep most of its reserves in it instead of further diversifying.
In February, it also decided to improve its Keeper Network by integrating a Chainlink Oracle. A blockchain oracle represents a way for it to access off-chain, real-world data. The move was explained as a way to boost Keeper Network’s ability to maintain the health and stability of DAI.
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About the author
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird’s US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.