MakerDAO boosts DAI lending capabilities via Spark Protocol roll-out

Quick Take

  • MakerDAO has introduced Spark, a DeFi lending protocol centered around the DAI stablecoin.
  • At first, users can borrow DAI using crypto assets as collateral at a 1.1% annual rate.

MakerDAO, the decentralized entity responsible for the DAI stablecoin, has unveiled Spark, a DeFi lending platform aimed at improving decentralized borrowing solutions for its stablecoin.

DAI is the fourth largest stablecoin with a market capitalization of $4.7 billion, trailing only USDT, USDC and BUSD.

Spark is a software fork of the leading lending protocol, Aave's Version 3, that integrates direct lending capabilities within MakerDAO. Through Spark, users can obtain DAI loans using assets such as ether (ETH), staked ether (stETH), and DAI. Spark functions independently from MakerDAO's primary mechanism, which solely permits users to generate new DAI as overcollateralized debt.

"Spark Protocol's first version, Spark Lend, is a lending marketplace specifically designed for supplying and borrowing crypto with a focus on DAI," MakerDAO stated. Starting Tuesday, the Spark Protocol will be accessible to all decentralized finance (DeFi) users, MakerDAO added.


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Borrowers can initially take DAI loans at 1.11% annual rate through Spark. The lending platform incorporates a tailored interest rate model, wherein borrowing rates are established by governance members through on-chain voting, instead of fluctuating according to supply and demand as found in Aave or other lending protocols.

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. The creation of Spark was led by Phoenix Labs, a contributing firm to MakerDAO.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Vishal Chawla is The Block’s crypto ecosystems editor and has spent over six years covering tech protocols, cybersecurity, artificial intelligence and cloud computing. Vishal likes to delve deep into blockchain intricacies to ensure readers are well-informed about the continuously evolving crypto landscape. He is also a staunch advocate for rigorous security practices in the space. Before joining The Block, Vishal held positions at IDG ComputerWorld, CIO, and Crypto Briefing. He can be reached on Twitter at @vishal4c and via email at [email protected]


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