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Maker going into LSD? What can Spark Protocol bring to Maker in New Markets?

Leoand others2Authors

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"Maker wants to build its own DeFi ecosystem"

Original article by Ignas, DeFi Researcher

Leo, BlockBeats

The liquid pledge derivatives (LSD) circuit has recently flooded the market, and Maker is ready to get involved. On February 9th, the MakerDAO community launched a new governance proposal to create a new liquid market Spark Protocol for lending cryptoassets focused on DAI. Spark Lend is its product that supports highly liquid decentralized assets as collateral. Maker also plans to launch Maker LSD Track ETH synthetic version EtherDAI. Spark Protocol is used to provide a market for EtherDAI to help guide demand. DeFi Researcher Ignas This article introduces the Spark Protocol and the prospect of Maker. BlockBeats is compiled as follows:

MakerDAO has just announced Spark Protocol: Aave competitor. The Spark Protocol proposal would signal a shift from Maker's modest approach to DAI (integration into existing DeFi protocols), where Maker wants to build its own DeFi ecosystem. The old Maker is dead, long live the new Maker.

Maker's strategic focus is to integrate DAI into leading DeFi protocols, for example, Maker recently enabled the Dai Savings Rate (DSR) with an APY of 1%. The expectation that Aave or Compound will consolidate the DSR will prompt USDC holders to lend DAI instead.

That didn't happen, and instead, Maker is forking Aave v3 centered around DSR integration and EtherDAI (more on that later). Sure, Aave gets 10% of the revenue, but the message is already clear: "Maker now does it himself".

Come to think of it, Aave is about to launch its own DeFi stablecoin GHO, an obvious DAI competitor; Similarly, crvUSD has been launched by Curve, which is critical to DAI's on-chain liquidity.

Compound launched v3, which only supports USDC borrow, while other crypto assets can only be used as collateral. I think this new model is a threat to DAI. Compound could have supported DAI, the two protocols were mutually beneficial, but it didn't.

In addition, Maker is about to launch EtherDAI, a synthetic liquidity pledged derivative (LSD) of ETH similar to Frax's frxETH, and a central part of Maker Endgame's plan is to make DAI a fair world currency.

EtherDAI will rely on Lido when it launches, as Maker does not yet have its own infrastructure and could make changes in the future.

"This will help us take market share in the rapidly growing LSD circuit."

That's not all. The Maker Spark Protocol will support two prophets, Chronicle 3 (formerly Maker Oracle) and Chainlink, as an additional security measure in case oracle fails.

Spark Protocol will have its own token, which will be wholly owned by Maker's MKR, which is a confusing part. Maker's Endgame plan envisions the creation of MetaDAO (or subdaos) to reduce the complexity of governing Maker.

You can think of Maker Core as L1 Ethereum: slow and expensive, but secure; While MetaDAO is L2's solution: fast and flexible, and gets security from L 1, Spark Protocol will be a fast and flexible part of Maker.

Each MetaDAO has a specific task at hand. Spark Protocol will serve as the backbone lending protocol for all current and future Maker services such as DAI or EtherDAI. It's like Google versus Alphabet: Maker Core is "Google" and MetaDAO is "Alpha Bets."

Each MetaDAO will have a token initiated through liquidity mining, which is how users acquire Spark Protocol tokens without pre-allocation or private/public sales. A liquidity mining extravaganza. Spoiler Alert: You need MKR to farm every SubDAO token.

The Maker Endgame plan assumes that regulatory safety is likely to deteriorate significantly with the global economic and social downturn. In order to adapt, survive, and recover, the Maker will have three states: Pigeon, Eagle, and Pheonix.

Maker is currently in the first state: Pigeon, whose goal is not to limit RWA exposure, DAI is still pegged at $1:1. Just as pigeons are not afraid of people, as long as Maker can tolerate minimal regulatory threat, it can get as much revenue from RWA as possible.

In fact, Maker already gets 57% of its revenue from RWA, Spark Protoco will help boost DAI's supply to generate more revenue, and it can integrate Element Finance and Sense Finance, To provide fixed-rate borrowing and diversified income.

In short, this is the new Maker: more aggressive and determined than the meek and submissive Maker we have seen so far. I bet Aave or Compound will support DSR soon.

If Maker is a pigeon now, I'm looking forward to its Pheonix status in the future!