MakerDAO Announces Aave’s Rival Spark Protocol

MakerDAO, a popular decentralized finance giant, has decided to come up with a lending platform to compete with Aave, named Spark Protocol. For context, Aave is the largest Ethereum-based Defi product, with $4.6 billion in total value locked (TVL).  MakerDAO is known for generating DAI stablecoins, and currently, its token MKR (MakerDAO token) is trading at $7771.85, after it has risen by 1.39% in the last 24 hours. 

Spark is a fork of Aave’s version 3  (v3), and will act as a front-end app where users can interact with DAI, and use it to borrow, lend, and even stake, as per the announcement. This is a shift in focus of MakerDAO, from its initially aligned model of issuing DAI. MakerDao has developed a research and development company, Phoenix Labs, that will be solely responsible for the development of Spark Protocol. 

Before this, Aave had also announced to introduce a new yield-generating stablecoin named GHO. There will be pricing oracles and data sources backed by Chronicle Labs and Chainlink to give an additional layer of security against exploitation. MakerDAO would also deploy etherDAI, a synthetic liquid staking derivative (LSD) for ether (ETH) that will be pegged at a one-to-one ratio with ETH. Liquid staking would allow users to produce extra yield on top of the regular rewards they receive for staking tokens.