Spark Protocol Depth Research Report: on-chain Capital Allocation Platform Incubated by MakerDAO

1. Project Introduction

1**、Project Basic Information**

Spark Protocol is a decentralized finance (DeFi) protocol focused on stablecoin yield and liquidity. It was initiated by the MakerDAO (now renamed Sky) ecosystem and developed by the Phoenix Labs team, which specializes in DeFi contract development. The vision of Spark is to build a cross-chain, multi-asset scalable yield engine that smartly deploys Sky's ecosystem of billions of dollars in stablecoin reserves into various DeFi, CeFi, and real asset (RWA) opportunities, providing stable yields for token holders. The protocol has been deployed on multiple mainstream networks, including Ethereum, Arbitrum, Base, Optimism, and Gnosis, with the current management of stablecoin liquidity reaching the billions of dollars level. Spark advocates for user-friendly yield solutions, simplifying complex strategies to make the appreciation of crypto assets as easy as bank savings.

Note: Data is as ofJuly14, 2025

2**, Project Development History**

The development history of Spark Protocol clearly reflects MakerDAO's strategic intention to evolve from a single stablecoin issuer to a complex, multi-layered financial ecosystem (Sky). Each step has been meticulously planned to leverage existing advantages and precisely penetrate and reshape the landscape of the DeFi lending market.

Key Milestones:

Ø May 2023: The protocol officially launched: Spark Protocol, developed by the core development team Phoenix Labs incubated by MakerDAO, officially launched on the Ethereum mainnet. Initially, the core function of the protocol is to provide an initial, price-competitive lending market for DAI using MakerDAO's Direct Deposit Module (D3M). The direct goal of this initiative is to reduce the borrowing cost of DAI, enhance its attractiveness compared to USDC and USDT, and recover a portion of the interest income that would have otherwise flowed to competing protocols like Aave and Compound.

Ø By the end of 2024: Strategic transformation and the rise of SLL: As the yield in the DeFi market declines generally, the narrative of "Real Yield" emerges. The Spark Protocol begins to strategically develop its "Spark Liquidity Layer" (SLL). The protocol is no longer content with merely being a passive lending platform but starts to actively allocate a large amount of funds in the pool to more stable real-world assets (RWA), such as tokenized U.S. Treasury bonds. This marks Spark's transformation from a purely DeFi protocol to a hybrid finance (HyFi) platform.

Ø Q1 2025: Multi-chain Expansion and Ecosystem Integration: In order to capture a broader user base and liquidity, the Spark Protocol, leveraging cross-chain technologies such as SkyLink and Circle's CCTP, begins to expand into Layer 2 networks (such as Arbitrum, Base) and other public chains. At the same time, SLL actively starts integrating with other DeFi protocols (such as liquid staking derivative protocols, yield aggregators, etc.) to build a complex yield strategy matrix.

Ø June 12, 2025: TVL Soars: Driven by strong market expectations for the upcoming airdrop of the native token SPK, a large number of users flocked to the Spark Protocol to participate in liquidity mining and incentive activities (such as Ignition, Overdrive). The protocol's Total Value Locked (TVL) sharply rose in a short period, once breaking through the $8.52 billion mark, fully demonstrating its strong market attractiveness and liquidity siphoning ability.

Ø June 17, 2025: SPK Token Genesis: The highly anticipated native governance token SPK officially launches. Through a retroactive airdrop to early users, liquidity providers, and community contributors, along with simultaneous listings on leading centralized exchanges like Binance, SPK quickly gained widespread market attention and liquidity.

3**、Project Strategic Positioning**

The "commercial bank" of the Sky ecosystem: If we consider the Sky ( MakerDAO ) with minting rights as the "central bank," then the Spark Protocol plays the role of the "commercial bank." It is responsible for efficiently allocating liquidity within the Sky system (mainly USDS) to borrowers in the market and providing competitive returns for depositors.

The flagship product matrix includes:

Ø SparkLend: As the cornerstone of the protocol, this is a fully functional money market that allows users to supply (Lend) and borrow (Borrow) various crypto assets with over-collateralization. It supports variable interest rates and fixed interest rate lending for certain assets to cater to different users' risk preferences.

Ø Spark Savings (sUSDS): This is an innovative savings solution where users can automatically earn the Sky Savings Rate (SSR) by depositing USDS into the module. The returns from SSR are highly diversified, including not only the interest margin from SparkLend's own borrowing and lending but, more importantly, stable returns generated by the protocol's investments in real-world assets (RWA) and other DeFi protocols through the Spark Liquidity Layer (SLL).

Ø Spark Liquidity Layer (Spark Liquidity Layer, SLL): This is the most strategically significant component of the Spark Protocol. SLL aims to actively and efficiently deploy idle or inefficient liquidity within the protocol to multiple blockchain networks outside of the Ethereum mainnet (such as Base, Arbitrum) and various high-yield DeFi protocols (such as Ethena, Morpho), thereby maximizing overall capital efficiency and returns.

Core Role in the Ecosystem:

Ø USDS liquidity engine: Spark is the primary liquidity outlet for USDS. All newly minted or idle USDS in the Maker vault can be efficiently injected into Spark through D3M and then allocated by Spark to the entire DeFi market. This ensures that USDS has a reliable and depth-sufficient lending market to support it, no matter where it is.

Ø Sky Savings Rate (SSR) Implementer: SSR is the core financial product for Sky to attract users to hold USDS. Spark is the main generator of SSR returns. Through its diversified investment strategies (RWA, cross-protocol deployment, etc.), Spark provides SSR with stable returns that are above the market average, making holding USDS itself a profitable investment.

Ø The strategic outpost of multi-chain: As the DeFi world evolves towards a multi-chain pattern, the dominant position on a single chain is no longer sufficient to support a world-class stablecoin. Spark utilizes advanced cross-chain infrastructure such as SkyLink and CCTP to act as the "vanguard" for USDS's expansion into emerging ecosystems like Arbitrum, Base, and Solana. By deploying the SparkLend market on these chains, it rapidly establishes monetary markets and application scenarios for USDS in the new frontier.

Ø Open and Integrated Connectors: The Spark ecosystem is open. Its SLL continuously seeks to integrate with the most innovative protocols in the DeFi space, whether it's Ethena's synthetic dollar or Morpho's peer-to-pool lending optimization. This strategy allows Spark to not only capture yield opportunities from external protocols but also to indirectly incorporate the users and liquidity of these protocols into Sky's ecological landscape.

Ø User Incentives and Community Binding: To drive the cold start and continuous growth of the ecosystem, Spark has designed a sophisticated incentive system. For example, point activities such as "Ignition" and "Overdrive" reward users for various interactions within the ecosystem (deposits, loans, referring new users, etc.) by distributing Spark Points. These points are ultimately linked to the airdrop of SPK tokens, thereby deeply binding early core users and fostering an active and loyal community. This model has proven to be an effective means of building strong network effects in the DeFi space.

4**、$SPK Token Economic Model**

$SPK is the native token of Spark Protocol, and its design philosophy profoundly reflects MakerDAO's pursuit of long-termism and sustainable development. Unlike many projects that tend to favor short-term high incentives in exchange for false prosperity, the token economics of SPK aims to cultivate a community that truly owns the protocol, growing together through a smooth, long-term release mechanism.

Total supply of SPK: 10,000,000,000 (100 billion ) pieces, minted in one go at genesis. Core functions include:

Ø Governance: SPK is the only credential for participating in the governance of the Spark Protocol. Holders can vote on key decisions of the protocol, including but not limited to: launching new assets, adjusting risk parameters (such as collateral ratio, liquidation threshold), setting or adjusting "transparent interest rates", deciding on the fund allocation strategy of SLL, and managing the use of ecosystem funds, etc.

Ø Staking (: In future plans, SPK will introduce a staking module. Users can participate in the security assurance mechanism of the protocol by staking SPK (similar to Aave's Safety Module) and serve as a last line of defense in the event of a protocol shortfall. In return, stakers will receive a portion of the protocol's revenue or additional SPK rewards (reflected in forms such as Spark Points).

The initial circulation of SPK is approximately 1.7 billion pieces, accounting for 17% of the total supply, mainly from early airdrops and liquidity incentives.

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The most notable feature of the SPK token allocation model is that the vast majority of tokens (65%) are reserved for long-term community incentive programs.

Token distribution structure explained:

Ø 65% - Sky Farming: This is the core of the SPK token economic model. This portion of tokens will serve as liquidity mining rewards and will be linearly distributed over a period of 10 years to users providing core assets (mainly staking USDS) in the Spark ecosystem. Its release follows a yearly decreasing schedule, with early participants able to receive higher rewards. This ultra-long-term incentive design aims to filter out short-term "mining-sell-withdraw" speculators, attracting and retaining liquidity providers and users who recognize the long-term value of the protocol, thereby building a stable and loyal community foundation for the protocol.

Ø 23% - Ecosystem Fund: This is a strategic fund pool controlled by community governance. Its uses are very diverse, including but not limited to: providing initial liquidity incentives for newly listed assets; funding marketing activities, developer bounty programs, and community education projects; establishing strategic partnerships with other DeFi protocols; executing additional airdrop activities, such as targeted airdrops for specific communities, as well as growth hacking activities conducted on task platforms like Layer3 (e.g., part of the rewards for Ignition and Overdrive points activities).

Ø 12% - Team and Core Contributors: This portion of the token allocation is given to the development team of Phoenix Labs and other early core contributors, in recognition of their hard work and to ensure their long-term interests are aligned with the project. To prevent early selling pressure, a strict lock-up plan is set for this portion of the tokens: all tokens have a complete lock-up period of 12 months (Cliff), after which they will be linearly unlocked over the next 3 years (Vesting). A total vesting period of up to 4 years ensures that the core team has sufficient motivation to continue working towards the long-term success of the protocol.

) 3. Project Outlook

Evaluating the future potential of a DeFi project requires a comprehensive consideration of three dimensions: macro industry trends, intense market competition, and its own clear development blueprint. The Spark Protocol not only arises from a promising core track but also demonstrates significant growth potential with its unique competitive advantages and forward-looking strategic planning. This chapter will provide an in-depth outlook on the project’s prospects from the perspectives of industry analysis, competitive landscape, and development planning.

1**, Industry Analysis**

The decentralized lending market is at a structural growth inflection point. According to QYResearch data, the global decentralized lending market is expected to reach $15 billion by 2025, with a compound annual growth rate of 25% or more. This growth is driven by three major trends:

Ø Institutions Embrace the Wave: Traditional financial institutions are accelerating their layout in DeFi, with the proportion of institutional participants increasing from 15% to 35% in 2024. Giants like BlackRock and Fidelity are allocating cryptocurrency assets through protocols like Spark, with single deposits often exceeding ten million dollars. These institutions particularly favor RWA products, driving the annual growth rate of this sub-market to 47%.

Ø Interest Rate Marketization Reform: With the end of the Federal Reserve's interest rate hike cycle, the interest rate advantage of DeFi protocols has once again become prominent. Currently, the sUSDS savings rate provided by Spark is 6.5%, which is far higher than the average interest rate of traditional banks in the United States. This interest rate differential attracts a large amount of funds to flow from the traditional financial system.

Ø Multi-chain liquidity demand: The TVL of Ethereum L2 networks will exceed $100 billion in 2025, but liquidity is highly fragmented. Spark's cross-chain solution can increase fund utilization by more than 3 times, addressing industry pain points. Data shows that over $1.8 billion in idle stablecoins exist on Arbitrum and Base on-chain, which is the core target market for Spark SLL layer.

However, the industry also faces severe challenges: increasing regulatory uncertainty, especially as the SEC's investigation into "unregistered securities offerings" for DeFi protocols expands to the top 20 projects; protocol revenues are generally under pressure, with major lending platforms' average net interest margin ###NIM( compressed from 1.8% in 2022 to 0.9%; and frequent smart contract risks, with losses in the DeFi space due to vulnerabilities reaching 1.7 billion dollars in 2024.

Against this backdrop, Spark Protocol, with the compliance foundation of MakerDAO (having obtained the Dubai VARA license) and RWA allocation capability (approximately 40% of assets are compliant government bonds), establishes a moat in the institutional market. Of its $3.86 billion in managed scale, over $1.5 billion comes from hedge funds and family offices, proving its institutional-level service capabilities.

)# 2**, Competitive Landscape Analysis**

Spark Protocol faces dual competition from traditional lending giants and emerging RWA players, with its differential advantage lying in its full-stack capital allocation capability:

Ø Competing with traditional giants (Aave & Compound): Aave occupies the largest market share with its first-mover advantage (TVL $21 billion), but its V3 version faces liquidity fragmentation issues in multi-chain deployment—each chain's market operates independently, making it impossible to allocate funds across chains. In contrast, Spark's SLL layer achieves true on-chain capital flow, with a capital utilization rate 40% higher than Aave. However, Aave's flash loans and credit delegation features remain irreplaceable, making it difficult for Spark to shake its position in innovative DeFi applications in the short term.

Ø Competing with vertical new entrants (Morpho & Exactly): Morpho Blue compresses the lending interest spread to 0.8% through a "point-to-pool" model, slightly better than Spark's 0.75%. However, it lacks RWA allocation capability, trailing behind by 10 during traditional interest rate hikes. Exactly focuses on interest rate precision but has a TVL of only $4.1 billion, less than one-third of Spark's. These new protocols face a common dilemma: a lack of MakerDAO-level capital reserves, leading to insufficient liquidity depth in extreme market conditions.

Ø RWA sector specialized competition: Protocols focused on RWA, such as Centrifuge (TVL $2.8 billion) and Goldfinch (TVL $1.9 billion), lead in the diversity of underlying assets, supporting complex assets like invoice financing and real estate mortgages. However, Spark has established an advantage in the compliant treasury bond allocation field by collaborating with licensed institutions, with its U.S. Treasury bond holdings reaching $1.2 billion, surpassing the total of Centrifuge and Goldfinch. Nevertheless, these specialized RWA platforms still possess competitive local knowledge for regional assets (such as European commercial paper).

3**, Development Plan**

According to the official roadmap, the future development of Spark Protocol revolves around three strategic pillars:

(1)2025: Cross-chain Expansion and Yield Enhancement

Technical focus includes:

1. Completed zk-Rollup integration in Q3, supporting ZK-based L2s such as zkSync and Starknet, expected to reduce cross-chain costs by 62%.

2. In Q4, launch "Yield Aggregator V2", adding support for Ethena's sUSDe and Pendle's YT assets, expanding sources of yield.

In terms of market expansion, we plan to enter the Southeast Asian market and collaborate with Singapore's DBS Bank ( to pilot an institutional-level RWA inflow and outflow channel, aiming to attract an additional $5 billion in TVL.

(2) 2026: Decentralized Governance and Ecological Expansion

The core milestone is the launch of the "Spark Federation" governance model:

Transfer decision-making power to SPK stakers, key parameter adjustments require a vote from veSPK holders.

Establish a SubDAO system, with a professional team responsible for specific areas (such as RWA asset review, risk parameter calibration).

At the same time, the open-source SDK toolkit will be released, aiming to attract 100+ ecosystem application integrations. It will focus on supporting innovative scenarios such as fixed-rate derivatives and options hedging, building a Spark ecological moat.

(3) 2027 and beyond: Large-scale applications in the real world

The long-term vision is to become the on-chain distribution layer of the global capital market:

Cooperate with traditional brokerages to allow traditional securities such as stocks and ETFs to be used as collateral.

Develop a "compliance output module" to help institutional users automatically meet regulatory requirements such as MiCA and SEC.

The target management assets reach 50 billion USD, with RWA accounting for 60%, linking DeFi yields closely with traditional financial markets.

) 4. Summary

1**、Core Conclusion**

Spark Protocol represents the evolution of infrastructure in the DeFi 3.0 era, with its core innovation being the algorithm-driven optimal allocation of cross-chain capital. The project's greatest advantage lies in the deep liquidity backed by the MakerDAO ecosystem ($6.5 billion Sky reserve) and the mature RWA channel (managing $3.86 billion of real-world assets), which creates a dual moat in the fiercely competitive decentralized lending space.

From the product architecture perspective, Spark has successfully integrated three major functions: lending, saving, and liquidity management, forming a complete closed loop of "Deposit-Allocation-Yield". In particular, the SLL (Spark Liquidity Layer) serves as the core of the protocol, optimizing cross-chain fund deployment in real-time, increasing the utilization rate of stablecoin funds to more than three times that of traditional protocols. Data shows that its AMM pool maintained an annualized yield of 64% during the market volatility in June 2025, validating the effectiveness of the model.

(# 2**, Valuation and Investment Recommendations**

Based on a comprehensive analysis of the project's fundamentals and market environment, we provide the following assessment of the SPK token:

![Spark Protocol Depth Research Report: On-chain Capital Allocation Platform Incubated by MakerDAO])https://img-cdn.gateio.im/webp-social/moments-967a2554fae42e523fc41111519d318f.webp###

Ø Positive Factors ###Bull Case###: Strong fundamentals, real protocol revenue, a clear growth path, and robust support from MakerDAO make SPK a strong competitor among DeFi blue chips. For investors seeking long-term value, SPK is a high-quality target that cannot be overlooked.

Ø Risks and Challenges (Bear Case): Investors must be acutely aware of potential risks.1( Regulatory Risk: The deep integration of RWA exposes it to uncertainties of traditional financial regulation, especially in the United States.2) Overvaluation Risk: Market frenzy triggered by airdrops may lead to overvaluation of tokens in the early stages of listing, posing a risk of correction.3( Systemic Risk: The complexity of the protocol means it faces risks of smart contract vulnerabilities, oracle failures, and the potential collapse of third-party protocols it relies on (such as Ethena).

Ø Intervention Strategy: It is recommended that investors avoid chasing highs during the most fervent market sentiment. One can wait for the market sentiment to cool down and the price to pull back, then validate with fundamental data of the protocol (such as TVL, revenue, user growth) and build positions in batches. Long-term holding and participating in protocol governance and staking may be the best way to share in its growth dividends.

![Spark Protocol Depth Research Report: on-chain Capital Allocation Platform Incubated by MakerDAO])https://img-cdn.gateio.im/social/moments-9b41240e2b37542aaedce2c1d132da99)

Investment Advice:

Ø Short-term (0-6 months): Neutral to cautious. The token inflation pressure is significant, and the airdrop selling pressure has not been fully released. From a technical perspective, $0.05 has formed a strong resistance level, and it needs to break through this level to confirm an upward trend.

Ø Medium to long term (1-3 years): Active allocation. After the staking and burning mechanism is fully effective in 2026, SPK will enter a deflationary cycle. It is recommended to adopt a dollar-cost averaging strategy, focusing on the growth of TVL (a monthly increase of 5% is a healthy indicator) and the allocation ratio of RWA (40% is the baseline).

)# 3**, Outlook**

The rise of Spark Protocol is a reflection of the evolution of the DeFi industry. In the future, the competition among DeFi protocols will no longer be a competition of single product functionalities, but a comprehensive confrontation between ecosystems. Those protocols that can integrate more resources, build stronger network effects, and connect off-chain real value will stand out in the competition. RWA, multi-chain liquidity management, and sustainable token economics will become the three pillars that define the next generation of DeFi blue-chip projects. Spark Protocol has already taken the lead in these three areas, and its future development is worth our continuous attention and expectation.