Crypto News: MakerDAO Launches Spark Protocol to Enhance Liquidity and Yield of DAI Stablecoin
Decentralized autonomous organization (DAO) MakerDAO has launched the Spark Protocol on the Ethereum blockchain. This lending platform aims to boost the liquidity and yield-bearing capabilities of its DAI stablecoin.
The announcement was made in a Twitter thread on May 8th, where Maker outlined Spark’s features as a lending marketplace designed to enhance DAI’s liquidity and lending capability, as well as offer a yield-bearing version.
Spark Protocol is linked to DAI’s direct deposit DAI module (D3M), providing it with a direct wholesale credit line and enabling it to supply additional liquidity to Spark Lend automatically. MakerDAO has stated that the interest rate will remain stable at an annual rate of 1.11%, regardless of utilization.
The Spark Protocol is part of MakerDAO’s Endgame plan, which aims to make DAI a free-floating asset initially collateralized by real-world assets (RWA). DAI will remain pegged to the dollar for the next three years, and MakerDAO plans to accumulate as much Ethereum (ETH) as possible to increase the ratio of decentralized collateral.
MakerDAO has recently made other significant moves, including moving 33% of its peg stability module to Coinbase’s custody and transferring an additional 500 million USDC to the exchange, aiming to improve its ecosystem. MakerDAO has also remained committed to its relationship with Coinbase and the USDC stablecoin, despite regulatory turmoil.
Although DAI is the largest decentralized stablecoin in the industry, with a circulating supply of $4.7 billion and a market share of 3.6%, its supply has decreased by 53% since its peak of almost $10 billion in February 2022.
MakerDAO’s native token, MKR, dropped 1.3% on the announcement day, trading at its lowest level for over a month. Furthermore, MKR is down 89% from its May 2021 all-time high of $6,292, with only just over 900,000 MKR in circulation.
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