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MakerDAO, a decentralized finance (DeFi) protocol and the issuer of stablecoin $DAI, has unveiled a new lending and borrowing system called “Spark Protocol”.
How Will Spark Boost Lending And Borrowing?
The Spark Protocol will act as a “lending marketplace,” providing users with supply and borrowing features for cryptocurrencies such as Ethereum ($ETH), staked Ether (stETH), $DAI and staked $DAI (sDAI). Starting from May 9, the Spark Protocol will be accessible to all DeFi users allowing borrowers to take $DAI loans at 1.11% annual rate.
Announcing the Spark Protocol launch ⚡️
Starting May 9, 2023, Spark Protocol will be available to all DeFi users.
An end-user, $DAI-centered DeFi product deployed on Ethereum with supply and borrow features for $ETH, stETH, $DAI, and sDAI. pic.twitter.com/oLa8oeBmL1
— Maker (@MakerDAO) May 8, 2023
The new lending protocol promises to enhance MakerDAO’s $DAI lending capabilities, increase liquidity, offer users improved rates, offer a yield-bearing version of $DAI and provide more liquidity options.
According to the announcement, Spark has been integrated with MakerDAO’s Direct Deposit Dai Module (D3M), a technology that enables interaction between the Maker ecosystem and third-party lending pools. This liquidity balancing system uses $DAI to keep liquidity in Spark Lend.
In addition, Spark will integrate with MakerDAO’s Peg Stability Module, enabling instant conversion of $DAI to $USDC at a 1:1 ratio for users seeking stablecoin swaps. MakerDAO tweeted,
“Spark Protocol is one of many innovations the Endgame Era will bring to the MakerDAO ecosystem, enabling a new groundbreaking solution that could only have arisen from the connection between a DeFi product and the Maker Protocol.”
Spark Protocol is one of many innovations the Endgame Era will bring to the MakerDAO ecosystem, enabling a new groundbreaking solution that could only have arisen from the connection between a DeFi product and the Maker Protocol:
— Maker (@MakerDAO) May 8, 2023
MakerDAO Rises With DeFi Popularity
This comes shortly after MakerDAO approved opening a real-world asset (RWA) vault for Coinbase Custody and the transfer of up to $500 million in $USDC stablecoins. It is part of an earlier decision to transfer up to $1.6 billion $USDC to Coinbase, as part of its strategy to diversify its reserves and increase revenues by investing in yield-generating traditional financial assets.
Furthermore, earlier this year, MakerDAO approved new constitution to formalise governance processes and secure $DAI stablecoin. The lending protocol claimed the primary purpose of this constitution is to establish formal governance processes and prevent hostile individuals from taking control of the protocol.
MakerDAO is a decentralised autonomous organisation (DAO) that enables collateralised crypto lending on the Ethereum blockchain through smart contracts. It functions around $DAI, which is soft-pegged to the US dollar and backed by locked-up crypto assets such as $ETH and wBTC, among others. The DeFi protocol made its presence known in the aftermath of the UST-Terra crash when users were loading up on $DAI, with the stablecoin trading at a premium for a brief moment in May 2022.