What Is Spark Protocol? SparkLend, Spark Savings and SPK

Spark began in May 2023 as MakerDAO's own lending market. It launched with ETH, stETH, DAI and savings DAI (sDAI) ¹⁴. MakerDAO later rebranded as Sky, and Spark became the first "Star," a semi-independent unit in Sky's restructuring plan ¹⁵.

The link is operational, not just historical. Sky's stablecoins (USDS and DAI) supply much of Spark's liquidity, and Spark's job is to deploy that capital ¹. Changes to Spark are made by editing the "Spark Agent" section of the Sky Atlas, Sky's governing document ⁹. Sky Governance also sets SparkLend's supply and borrow caps and decides which assets are listed in isolation mode ³.

SparkLend is a pooled money market. You supply assets, which earn interest because others can borrow them, and you borrow against your collateral ³. It runs on the Aave v3 codebase with Spark-specific changes, such as a custom interest-rate strategy for DAI ¹².

A typical flow:

1. Connect a wallet to the Spark app on Ethereum and supply collateral such as ETH, wstETH or cbBTC.
2. Borrow a stablecoin or another listed asset up to your borrowing power.
3. Monitor your health factor. If it falls below 1, liquidators can repay part of your debt and take collateral at a bonus. Up to 50% of the debt can be liquidated between a health factor of 0.95 and 1, and up to 100% at or below 0.95 ³.

Spark describes SparkLend as conservatively run, and lists these controls ³:

• A short collateral list. ETH e-mode accepts only wstETH and rETH. BTC e-mode was removed in June 2026, and the remaining positions were force-liquidated on June 8, 2026.
• Three-oracle median pricing from RedStone, Chainlink and Chronicle, plus a "killswitch" that halts new borrowing if a pegged asset like wstETH or WBTC drifts from its underlying.
• Caps and rate limits on deposits, withdrawals, bridging and swaps, so one event cannot drain a market in a single block.
• No rehypothecation. Supplied collateral stays in its reserve.
• Programmatic liquidity. The Liquidity Layer tops up USDS, USDC and USDT when utilization runs high.

Interest rates are variable and depend on utilization and governance-set parameters. The live numbers are in the Spark app.

Spark Savings vaults take a single asset and pay a variable savings rate. Each vault token follows the ERC-4626 standard and grows in value as yield accrues ⁵⁶.

Rates on the Spark-operated vaults are set by Spark Governance ⁵. Spark says the vaults have no lockups and that you can withdraw at any time. If a withdrawal is larger than the idle liquidity in a vault, a "Liquidity Intent" request handles it. On Ethereum this is available for spUSDC and spUSDT ⁶. Credora, a DeFi risk analytics firm, publishes independent risk assessments of the vaults ⁶.

Spark also works with Morpho in two ways.

• Isolated Markets. The Spark app shows Morpho lending markets. Each one pairs a single collateral asset with a single loan asset and has its own oracle and liquidation threshold. Problems in one market do not spread to others. Collateral posted there is not lent out ⁷.
• Curated vaults. Spark curates Morpho vaults, choosing which markets the deposits go to. Examples are the Spark USDC Vault on Base (10% performance fee; about $420 million on October 23, 2026) and the Spark Blue Chip USDC Vault on Ethereum (1% performance fee; about $30 million) ¹⁶¹⁷. As curator, Spark sets allocations and caps, while Morpho's contracts hold the funds.

The Spark Liquidity Layer (SLL) is the system that moves Sky stablecoin capital into approved venues: Spark's own markets and vaults, other DeFi protocols and off-chain opportunities ¹⁸. Governance must approve each venue in advance. Automated "relayer" wallets can only move funds between approved venues, within rate limits and slippage floors. Spark's threat model assumes a relayer could be fully compromised, so the contracts bound what it can move ⁸. Spark says the SLL has run since November 2024.

Spark does not charge one headline fee:

• SparkLend: borrowers pay variable interest, and suppliers earn part of it. Rates and parameters are set through governance and change over time ³.
• Savings vaults: you earn the vault's published rate. Spark's docs describe the products as "fee-free" for users ¹.
• Swaps between USDS, USDC and DAI in the app have no slippage and, under current parameters, no protocol fee beyond gas ⁶.
• Morpho vaults curated by Spark charge a performance fee that varies by vault, for example 10% or 1% ¹⁶¹⁷.
• You pay Ethereum or Layer 2 gas on every transaction.

SPK is Spark's governance and staking token ¹⁰. Holders can vote directly or delegate to whitelisted delegates. A Spark Risk Council reviews proposals and can block high-risk ones ⁹. SPK can be staked through Symbiotic. Stakers currently earn Spark Points, and Spark says staked SPK may later be used to secure Spark services ¹⁰. You can earn SPK by depositing USDS into the SPK Farm. The airdrop is over: the last claim date was December 17, 2025 ¹⁰.

The token's EU white paper names SPK Company Ltd., a British Virgin Islands company registered in February 2025, as the offeror. Its sole director is the Spark Foundation in the Cayman Islands ¹¹. The paper says it has not been approved by any EU authority, and that SPK is not covered by investor-compensation or deposit-guarantee schemes ¹¹. Research published in 2025 put total supply at 10 billion SPK emitted over ten years ¹⁵.

• Smart-contract risk. The core is audited Aave v3 code, and Spark lists separate audits for its own changes ¹². Audits do not guarantee there are no bugs.
• Liquidation risk for borrowers if collateral prices fall or debt grows.
• Stablecoin dependence. The USD savings vaults are backed by USDS, so their value depends on Sky's collateral ⁵.
• Governance changes. Markets can be frozen or deprecated. The Gnosis Chain markets and BTC e-mode were wound down in 2026 ³⁴.
• Phishing. Only spark.finance, spark.fi and their subdomains are official ². Spark never needs your seed phrase.