by Ammar Raza
MakerDAO, the leader in decentralized finance (DeFi), has seen a major boost in its capabilities due to Phoenix Labs. The blockchain firm has proposed Spark Lend, a new DeFi solution built on top of the MakerDAO platform.
It will allow anyone to borrow DAI, MakerDAO’s stablecoin, at the Dai Savings Rate (DSR) and enjoy a host of new features such as cross-margin, short positions, high leverage, and many more.
Revolutionary Spark Protocol Elevates MakerDAO To New Heights
On February 8th, Phoenix Labs proposed the Spark Protocol promises to elevate the DeFi giant to new heights. By enabling a liquidity market for supplying and borrowing scalable crypto assets with variable and fixed rates.
The proposed protocol will support EtherDAI and implement the first resilient oracles to improve Maker’s strength. It will also evolve over time, adding new features to the front end by integrating Maker’s products and the most innovative DeFi solutions.
According to the MakerDAO governance forum, Spark Lend, the product under Spark Protocol, is a lending market that will integrate Maker’s D3M and the PSM. The main differentiator of Spark Lend from existing lending protocols is its D3M.
Maker already has the cheapest credit in DeFi due to the absence of third-party liquidity providers. It will further amplify this advantage by allowing anyone to borrow DAI at the Dai Savings Rate. Spark Lend will focus on highly liquid, scalable types of collateral and will not compete with markets that offer “tail assets.”
Spark Fixed Rates: Capital-Efficient Fixed Rates In DeFi
Phoenix Labs plans to efficiently deliver fixed rates in DeFi capital through Spark Fixed Rates. Spark Protocol intends to partner with fixed-rate protocols such as Deco, Sense Finance, and Element Finance to deliver this feature by the second half of 2023.
These protocols have already done the heavy lifting, and Spark Protocol will simply plug into them to offer fixed rates to Spark Lend users.
Moreover, regarding revenue generation and scenario analysis, at the start, Spark Protocol will generate revenue mainly through variable-rate loans in its borrowing and lending market.
Later, fixed-rate loans and other adjacent revenue streams will be added. The main factors driving protocol revenue at the beginning include the variety of pools offered, TVL, utilization rates, and interest rate curves.
Additionally, Scenario analysis shows that Spark Protocol could achieve substantial adoption and profits once properly ratified and funded with initial start-up capital.
Nevertheless, Phoenix Labs’ Spark Lend and Spark Protocol are set to revolutionize the DeFi landscape, bringing the best rate available in DeFi, capital-efficient fixed rates, and highly secure and scalable lending solutions. The future of DeFi just got a lot brighter with Spark Lend and Spark Protocol on MakerDAO.
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