Sam MacPherson, the Protocol Engineer at MakerDAO, has announced the launch of its growth-focused arm – Spark Protocol. The first product of Spark Protocol will be Spark Lend. The launch is tentatively scheduled for April 2023, subject to the receipt of approval.
Built on Aave V3, Spark Lend aims to bring the best lending facilities in the industry to users. Spark Lend receives the advantage from Maker through a credit line called Dai Direct Deposit Module, also known as D3M. It enables users to borrow any amount of Dai at the rate of 1% Dai Savings Rate. The rate is valid at the time of drafting this article, and it may change at any time. Until then, it remains one of the best rates in the DeFi sphere.
An initial debt ceiling of 200 million DAI has been set by Mark Protocol.
Sam MacPherson has expressed excitement on everyone’s behalf by saying that the team is not just going to stop at Spar Protocol. One of the milestones that it additionally looks to achieve is the offering of fixed rates in the DeFi sphere, a piece of the puzzle that has been missing for a long time. Capital efficiency will be at the top of the chart.
Fixed-rate protocols are joining hands with Spark Protocol to explore the possibilities of bringing the change. Element Finance and Sense Finance have already boarded the bus, with others expected to join hands in the coming days. The core objective is to review if a market-driven fixed borrowing rate can be offered to scale the program.
An integration with Element Finance would seek to open the market for Hyperdrive, allowing users to access terms for three, six, or twelve months without attaching an arbitrary maturity date. This will follow the integration with Spark Lend. Element Finance has called Hyperdrive the next research leap, specifically on variable and fixed primitives.
In a word, the DeFi yield curve is to be bootstrapped using a combination of Makers’ liquidity and, Spark Lend’s leverage, & advanced fixed rate protocols. When they are all considered together, the ecosystem’s interest rate will be predictable.
Spark Protocol is also working with Chronicle Protocol, and Chainlink Feeds to investigate oracle improvements with the aim of providing resilient prices. Price manipulation will be avoided by processing both feeds through DEX TWAPs, circuit breakers, and signed price feeds. Two oracle networks will offer assurance to the users that the operations of Spark Protocol will continue even if a single network is compromised.
This is expected to work well for users who have earlier faced issues by trusting a single oracle network.
The launch of EtherDAI is in the pipeline as well. It is basically a synthetic version of ETH by Maker. Spark Protocol is likely to assist by offering a market for EtherDAI after the launch.
Spark Protocol is wholly owned by the Maker Governance, with development wheels in the hands of Phoenix Labs.
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