MakerDAO to launch Spark lending platform to rival Aave
MakerDAO is releasing a new lending platform called Spark Lend to rival Aave, one of Ethereum's largest DeFi products. Spark Lend is a lending platform being launched by MakerDAO that utilizes smart contracts from the Aave lending protocol. It is designed to facilitate lending and borrowing of the decentralized stablecoin $DAI, with the goal of making it more accessible to a wider audience.
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Spark Protocol is a fork of Aave v3 and will be a front-end app allowing users to interact with the $DAI stablecoin by borrowing and lending, according to an announcement on the MakerDAO forum. At launch, the first offering will be Spark Lend (SL), a lending market focused on the most liquid, decentralized, and highest market cap assets. MakerDAO has formed Phoenix Labs, a research and development company that will be tasked with building the Spark Protocol. Spark Protocol's emergence as a potential rival to Aave, comes after Aave voted to introduce its own yield-generating stablecoin, dubbed $GHO, last year. The new protocol will be reinforced by pricing oracles, or data sources, provided by Chronicle Labs and Chainlink to enhance security in case one of the two goes down or suffers an exploit.
On February 23, 2023, research and development company Phoenix Labs announced the launch of the Spark Lend testnet for DeFi users to be able to start interacting with and testing all the features of the app. Spark Protocol will evolve over time, adding new features to the front end by integrating Maker’s products as they are available, as well as the most innovative DeFi solutions in the space.
The first product is Spark Lend, a lending market with a front end that will integrate Maker’s Direct Deposit Sai Module (D3M) and the Peg Stability Module (PSM). After launching Spark Lend, Phoenix Labs aims to continue delivering new products and features. The 2023 Road Map includes Spark Fixed Rates, Resilient Oracles, cross-chain support, Maker teleport support, and bootstrapping of $EtherDAI.
Spark Lend is the first product of the Spark protocol, which aims to allow anyone to borrow $DAI at the Dai Savings Rate, offering the best rate available in DeFi, along with all the best features, such as cross-margin, short positions, high leverage, and more. Spark Lend will focus on scalable types of collateral that are highly liquid, providing a secure platform for all of DeFi. By including a tokenized Savings $DAI and easy access to the 1:1 $USDC PSM swap, users will be able to enter and exit the Dai Saving Rate (DSR) from a single UI, providing retail users access to the DSR from $USDC. This is something that does not currently exist in any UI. Overall, the Spark Protocol is expected to offer more options and greater accessibility to the decentralized stablecoin $DAI and other scalable crypto assets, thereby benefiting all those involved in the cryptocurrency ecosystem.
The Spark Protocol will enhance the features of MakerDAO and improve its strength by enabling a liquidity market for supplying and borrowing scalable crypto assets with variable and fixed rates. Spark Lend will enable users to deposit assets as collateral and borrow assets as debt from other users. By natively supporting D3M and PSM, Spark Lend will be able to offer highly competitive rates on lending and borrowing $DAI. This will be possible because it can take advantage of MakerDAO's unique features, allowing it to offer low-cost credit without the need for third-party liquidity providers. As a result, Spark Lend will be able to provide users with access to the best rates available in DeFi, while maintaining the security and liquidity of highly liquid, decentralized assets with large market caps. This will ultimately make $DAI more competitive as a stablecoin in the lending market.