Spark Protocol is the official lending interface built on top of MakerDAO's infrastructure, launched in 2023 by Phoenix Labs — a development team funded by the MakerDAO DAO. Spark is a fork of Aave v3 with critical modifications that give it a unique competitive advantage: access to DAI/USDS liquidity at rates set directly by MakerDAO governance, rather than algorithmically.
The Spark Advantage: Direct DAI Access
Spark's defining feature is the DAI Direct Deposit Module (D3M), which allows Spark to draw virtually unlimited DAI from MakerDAO at a rate set by governance (currently around 5%). This means Spark can offer DAI/USDS borrow rates that are predictable and often lower than competitors, while simultaneously offering the DAI Savings Rate (DSR) to depositors. The result is a protocol where the spread between borrow and supply rates can be intentionally compressed to attract volume.
How Spark Differs from Aave
While Spark's smart contract architecture closely mirrors Aave v3, several differences are significant: - No AAVE safety module requirements — Spark uses Maker's own backstop - DAI/USDS borrowing at governance-set rates (not purely algorithmic) - tighter integration with Maker's collateral types (sDAI, stETH, WBTC) - Lower fees: Spark directs 10% of its revenue to the Maker DAO rather than charging an independent protocol fee
sDAI — savings DAI — is a yield-bearing version of DAI that automatically earns the DSR. Users can supply sDAI to Spark and earn leveraged exposure to the DSR rate.
Arbitrage with Spark
The predictability of Spark's rates creates arbitrage opportunities. When USDC supply rates on Aave or Compound exceed the Spark USDS borrow rate, users can borrow USDS on Spark, convert to USDC, and supply to the higher-rate protocol. This spread trade has historically yielded 1–3% annualized with minimal directional risk.
SPK Token
MakerDAO has announced plans to distribute SPK governance tokens to Spark users retroactively (airdrop) and as ongoing rewards. The tokenomics and distribution schedule were not finalized as of mid-2025, but the expected airdrop has attracted significant TVL growth in anticipation.