Today we will look at a newly launched project, which is actually just an old wine in a new bottle, that is Spark, which is essentially the original Maker protocol (later renamed SKY), split into one of the five sub-protocols, with Spark's main focus being lending and yield segments, providing yield-generating stablecoin products like sUSDs and sUSDC, aiming to effectively integrate and utilize on-chain and off-chain capital.
Currently, after the project's launch, the overall market value is 80 million, with FDV at 470 million USD. Today, let's see if it's worth that price.
Core functions of the Spark Protocol
1. Sub DAO Positioning
Spark is one of the five core SubDAOs of Sky, with an independent governance token SPK, operating independently, but its funds and mechanisms are highly linked to the Sky main protocol.
2. The actual landing of sDAI
Spark was initially positioned as the yield-generating entry for DAI deposits, officially the lending protocol for sDAI (Saving DAI):
Users deposit DAI into Spark → actually enters Maker's DAI Savings Rate (DSR) system;
Users can obtain sDAI and enjoy DSR interest;
At the same time, Spark supports collateral lending, leverage, and other functions for sDAI.
> For example: If you deposit 1000 DAI, it will be converted into sDAI, enjoying an annual interest rate of 5%-8%, and you can also use it to lend other assets.
3. Multi-asset support
Currently, Spark has supported various collateral and lending assets, such as:
Lend/Borrow: ETH, wstETH, WBTC, DAI, sDAI, USDC, GNO, etc.;
Using DSR to provide a stable interest source, avoiding complete reliance on market liquidity mining.
Mutual dependence with SKY:
- Spark uses stablecoins provided by Sky (DAI, sDAI, future sUSDC);
- Spark's yield comes from the DSR (DAI Savings Rate) set by the Sky main protocol;
- Spark's risk management model is based on Sky's governance structure, initially determined by the Sky community;
- Ultimately, Spark's governance will be decided by the SPK token community, possessing a certain degree of independence.
The significance of Spark
1. DeFi's 'Savings Account': Similar to an on-chain version of Yu'ebao, focusing on 'low risk, stable returns.'
2. Connecting with RWA: The DAI savings interest earned by Spark partially comes from returns generated by off-chain real-world assets (RWA) (such as US Treasury bonds).
3. SubDAO Experimental Field: It verifies the feasibility of Sky's 'modular financial system': each module is independently governed, has its own tokens, but shares a base stablecoin and governance mechanism.
Overview of the five core SubDAOs of the Sky Protocol
1. SparkDAO ('On-chain Bank', Lending and Savings Protocol)
Function: Manage lending of assets such as sDAI, sUSDe, ETH, wstETH, etc.;
Core products: sDAI (yield-generating DAI), lending market, DSR access;
Governance token: SPK;
Representative significance: The SubDAO initially promoted by Maker, which was first launched and is already operational.
2. ChronosDAO ('Guardian of Currency Pegging Mechanism')
Function: Maintain the pegging of stablecoins issued by Sky (such as sUSDe, sDAI, DAI);
Tools: Arbitrage mechanism, rebalancing system, automated peg adjustments;
Governance token: CHR;
Significance: Ensure the trust foundation of Sky's stablecoin system and prevent de-pegging risks.
3. BellasDAO ('Liquidity Experts')
Function: Promote liquidity of DAI/sDAI/USDe on mainstream DEXs (such as Uniswap, Curve, Balancer);
Action: Provide LP funds, set incentive programs;
Governance token: BLS;
Significance: Ensure the usability and depth of Sky's stablecoin in the market, enhancing network effects.
4. AndromedaDAO ('Multi-chain Expansion Pioneer')
Function: Deploy Sky's assets and protocols to Layer 2 and other sovereign blockchains;
Target chains: Arbitrum, Optimism, Solana, Base, Cosmos, Polkadot;
Governance token: ADR;
Significance: Implementing Sky's cross-chain ecological expansion strategy, it is the landing point for the SubDAO modular expansion.
5. AtlasDAO ('Off-chain Asset Management')
Function: Focus on investment and management of RWA (real-world assets);
Asset examples: US Treasury bonds, short-term Treasury bills, institutional bonds, etc.;
Governance token: ATS;
Significance: Provides stable returns for the entire Sky (such as the source of DSR), promoting the integration of DeFi and TradFi.
Current Progress & Latest Data
Spark Saving TVL: 300 million USD, with yields of 4.5% for sUSD and susdc, which is 1% higher than AAVE's pool at 3.4%.
Lend pool TVL is 3.4 billion USD, with only 70%-80% lending capacity, and the current lending rate is around 5%, slightly higher than AAVE by about 0.2%.
So you can roughly calculate his income, which is 3 billion * 0.5% = 15 million!
Token Economics
Total token supply: 10 billion, currently circulating: 1.7 billion. SPK is the native governance and staking token of Spark.
Distribution as follows: sky users earn 6.5 billion, ecosystem 2.3 billion, team 1.2 billion.
Release as follows, with earnings released over ten years, team over four years!
If calculated based on the current protocol income, the current market value is 450 million USD, which is already a 30 times PE, but the current TVL growth rate is still relatively fast.
However, the problem with the tokens themselves is that they do not provide any empowerment or effect; their only role is rewards. Currently, SPK staking rewards and providing liquidity will also have rewards, and those rewards are SPK. Therefore, SPK tokens do not have the ability to capture value but rather have a continuous release.
So why does SKY want to split a protocol into five parts? Those who understand will understand. The previous MKR has finished distributing, and what should we do if there are no tokens left? Just open a new one. This time, SKY not only opened a new one but also intends to bring five sub-protocols. It can only be said that the current project teams are not focusing on building projects properly and are playing these tricky games. MKR was originally the industry leader in decentralized stablecoins, and this will set a bad precedent!
