MakerDAO launches rival to Aave’s lending DeFi project.

MakerDAO developers have launched Spark Protocol—a liquidity market built on the DAI stablecoin and collateral assets backing the DeFi platform.

Announcing the Spark Protocol launch ⚡️

Starting May 9, 2023, Spark Protocol will be available to all DeFi users.

An end-user, DAI-centered DeFi product deployed on Ethereum with supply and borrow features for ETH, stETH, DAI, and sDAI. pic.twitter.com/oLa8oeBmL1

— Maker (@MakerDAO) May 8, 2023

Spark Protocol is intended to become Maker’s first native lending interface. The DeFi platform could gain an additional revenue stream by lending to its users under a strategy for using reserve assets.

Spark Protocol operates independently of MakerDAO.

“The first version of Spark Protocol, Spark Lend, is a lending market […] with a focus on DAI”, — the developers said

The functionality of the solution is based on the third version of the Aave project’s smart-contracts system Aave.

Aave launched the third version of the protocol on January 27, 2023. According to the platform’s founder Stani Kulechov, it has received a host of new risk-reduction features, as well as improved capital efficiency and decentralized liquidity while lowering gas costs.

Initially, users will be able to borrow DAI at an annual rate of 1.11%.

The SL markets:

• DAI;
• ETH;
• wstETH from Lido;
• WBTC;
• Savings DAI (DSR-locked DAI).

Spark Lend’s interest rates are set by community members via governance votes. This differentiates the project from competitors, where rates are determined by supply and demand.

The protocol is integrated with the MakerDAO’s PSM. This will allow the instant conversion of DAI and sDAI into USDC at a 1:1 ratio.

In the future, within Spark Protocol is expected to include farming products with fixed terms and a native synthetic derivative of liquid staking called EtherDAI.

The next steps on the 2023 roadmap involve adding manipulation-resistant oracles, fixed rates — Spark Fixed Rates, support for L2 solutions and sidechains.