Spark Protocol

Spark is a lending system built mainly around stablecoin liquidity, borrowing and yield (SparkLend + Spark Savings), routing USDS/DAI liquidity from the Sky/Maker ecosystem at scale. Spark is the lending and capital-allocation arm of the Sky ecosystem, formerly MakerDAO, and describes itself as a two-sided capital allocator that borrows from Sky's stablecoin reserves and deploys capital across DeFi, CeFi and RWAs (Spark docs). It has three products: Spark Savings (vaults including sUSDS), SparkLend (a USDS-centric money market), and the Spark Liquidity Layer, which provides liquidity directly into DeFi markets across networks (Spark docs). SparkLend is a fork of the Aave V3 codebase, run conservatively with a narrow collateral set, multi-oracle pricing, strict rate limits and first-loss capital (Contango, Spark docs). Rates are hybrid: a variable rate driven by supply and demand within SparkLend, plus transparent rates that behave as a short-term fixed rate and change only through Sky Governance (Spark docs). Liquidation is Aave-style: below a health factor of 1 but above 0.95, up to 50% of debt can be covered; at or below 0.95, up to 100% (Spark docs).

Not just general lending, its edge is the Sky/Maker connection (DAI/USDS): how it creates, routes, lends and manages stablecoin liquidity.

- SparkLend: Lending market forked from Aave V3 architecture, optimized for Sky/Maker stablecoin liquidity. - Spark Savings: Yield product routing USDS/DAI liquidity from the Sky ecosystem at scale. - USDS / DAI liquidity: Primary stablecoin rails connecting Spark to the broader Sky/Maker credit stack.

- Spark Protocol (SPK): Token, Governance token - SKY (SKY): Token, Sky ecosystem governance (MKR successor) - USDS (USDS): Stablecoin, Primary stablecoin liquidity (Sky) - sDAI (Savings DAI) (sDAI): Receipt, Staked Stablecoin - spUSDC, spWETH (and other spTokens) (spUSDC): Receipt, Lending Receipt Token

- Smart Contract: Upgradeable or complex lending logic can fail under edge-case liquidations or parameter misconfiguration. - Oracle: Stale or manipulated price feeds impair collateral valuation and liquidations. - Collateral: Correlated collateral drawdowns or listing errors can create bad debt in money markets. - Liquidity: Thin borrow/supply depth impairs exits and liquidations during market stress. - Governance: Parameter changes, listings, and emissions are controlled by token holders or delegates. - Stablecoin: Heavy reliance on USDS/DAI peg and Sky governance for core liquidity rails.

- Underwriting: similar in that Deliberately short collateral list. ETH e-mode collateral limited to wstETH and rETH; BTC e-mode fully removed, deprecated on the Sky forum, executed in the June 2026 spell, with remaining positions force-liquidated on 8 June 2026; differs in that Group-level eligible-collateral schedule, tightened by the parent's risk committee - Collateral: similar in that Peg-ratio oracles continuously compare market price to underlying for wstETH, rETH, weETH, cbBTC, WBTC and LBTC; per-market supply and borrow caps set by Sky Governance; differs in that Independent valuation agent plus concentration limits per pledge type - Settlement: similar in that The Spark Liquidity Layer automatically moves USDS, USDC and USDT into and out of SparkLend based on target borrow rates, utilisation and available inventory at other venues, topping up idle liquidity so withdrawals and liquidations can clear; differs in that Group treasury sweeping liquidity into and out of a subsidiary's funding book - Rate setting: similar in that Hybrid: a variable utilisation rate plus transparent rates that act as a short-term fixed rate and change only through Sky Governance. At launch the rate was a flat governance-set rate rather than utilisation-driven, starting at 1.11% APR via Maker's D3M; differs in that Internal transfer pricing set by group ALCO rather than by the subsidiary - Recourse on default: similar in that Liquidation only, with the Spark treasury acting as junior capital required by Sky to meet the risk-required capital needs for accessing the Sky credit line; differs in that Subsidiary's own capital absorbs first loss before the parent's line is impaired - Regulation: similar in that No licence, and deliberately not offered in the US on regulatory-uncertainty grounds. Governance flows through the Sky Atlas, with an SPK Snapshot layer for signalling; differs in that Regulated subsidiary that geo-fences products it cannot lawfully offer