MakerDAO, one of the first decentralized finance (DeFi) Protocols built and established on the Ethereum blockchain, plans to launch Spark Lend (SL), a credit market focused on “liquid, decentralized, and high market capitalization assets.”
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The team formerly known as Crimson Cluster is declare Launch Phoenix Labs, a research and development company building the Spark Protocol, which according to MakerDao developers, will bring significant structural changes to the Maker Protocol and MakerDao itself. According to the announcement:
That is why we decided to create Phoenix Labs to support this new phase of growth and innovation by looking out and challenging our culture to build a home because only together we can achieve greatness. We want to bring new decentralized products to Maker and start building for future Creator subDAOs.
A Rising Tide Lifts All Boats
Phoenix Labs focuses on integrating existing product verticals into Maker and sharing value creation with developers. Everything Phoenix Labs builds has the protocol’s original stablecoin DAI at its core.
MakerDao will own every product that Phoenix Labs builds. Once the “Creator SubDAO” model is defined, the Spark Protocol will move to one of them.
The Spark protocol will extend MakerDao’s ability to offer a “liquid market” to supply and lend scalable crypto assets at fixed rates, supporting EtherDAI, a stable and decentralized stablecoin on the Ethereum blockchain.
According to the announcement from the MakerDAO governance forum, the Spark protocol will evolve, adding new features that integrate Maker products while making them available for the most innovative DeFi solutions in the crypto space.
Spark Lend will integrate the Maker’s Direct Deposit Module (D3M), a key differentiator from existing lending protocols, and the Peg Stability Module (PSM). After the launch of Spark Lend, Phoenix Labs aims to deliver new products and features by 2023.
Features on the roadmap include Spark Fixed Rates, Resilient Oracles, cross-chain support, maker teleport support, and EtherDAI bootstrapping.
Spark Lend will focus on scalable types of liquid collateral; SL will not compete with markets that offer “tail assets.” SL will strive to be the most secure platform in all of DeFi.
SL will support the following markets at launch:
- DAI
- ETH [E-Mode Enabled]
- Lido wstETH [E-Mode Enabled]
- WBTC
- Saving DAI (DSR-locked DAI) [Collateral Only]
Spark Lend MarkerDAO, Aave Killer?
The DeFi researcher, who goes by the pseudonym Ignas, stated which launched the Spark Lend protocol will create a platform to directly compete with the Ethereum DeFi protocol Aave. The general expectation is that Aave or another DeFi protocol known as Compound will merge DSR and USDC holders and migrate to DAI.
For researchers, that hasn’t happened yet. Instead, Maker made Aave v3 with DSR and EtherDAI integration. Spark Lend will be built on Aave v3, and 10% of the revenue generated with the protocol will be sent to AaveDAO in exchange for all the hard work, according to protocol engineer Sam Macpherson at MakerDao.
On the other hand, Aave is set to launch DeFi stablecoin GHO, a clear competitor to $DAI. Curve also launched a stablecoin called crvUSD, and Curve is “vital to DAI’s on-chain liquidity.”
The Spark protocol is set to launch in April, depending on the government’s vote. It will open a DAI loan vault on MakeDAO, with a loan of $200 million. It also marks a milestone for Maker, as Spark will be the first native Maker-based lending interface.
Maker’s original token MKR has fallen 1.1% in the last 24 hours, trading at $757 at the time of writing. Still, MKR was in the green for the previous seven days, with gains of 13.4% and 23% over the last 30 days.
Feature image from Unsplash, chart from TradingView.