Spark

Spark is part of the ecosystem around Sky, the issuer of the USDS and DAI stablecoins formerly known as MakerDAO. Sky calls such units "Sky Stars". Spark's own FAQ describes it as a two-sided capital allocator: on one side it borrows from Sky's stablecoin reserves and deploys the money across DeFi, centralized lenders and real-world assets; on the other it packages the return into savings tokens such as sUSDS, spUSDC and spUSDT.

Several legal entities sit around the protocol. The website terms name Spark.fi Inc. as operator of spark.finance; the terms were first published on 9 May 2023 and last updated on 2 April 2026, and they are governed by Cayman Islands law. Spark's MiCA white paper names SPK Company Ltd., registered in the British Virgin Islands on 19 February 2025, as the offeror of the SPK token. Its sole director is the Spark Foundation, whose listed directors are Glenn Kennedy and Marc Piano, with a business address in Grand Cayman. Spark does not publish a list of the developers who build the code.

SPK is the governance and staking token. Ten billion were minted at genesis: 65% goes to Sky to distribute through a ten-year farming program for USDS depositors, 23% to the Spark ecosystem and 12% to the team, which vests over three years after a 12-month cliff. Spark's docs note that Sky retains the ability to mint more SPK in extreme circumstances. The SPK airdrop closed on 17 December 2025.

Spark Savings vaults are ERC-4626 tokens: a user deposits USDC, USDT, PYUSD, USDS, USDG or ETH and receives a token whose value grows at the vault's savings rate. Each vault has its own yield source and risk notes, and some are rated by the risk firm Credora. Spark's comparison of savings products is in a separate rating of yield products.

SparkLend is a money market built on the Aave v3 code base from Aave. Users supply collateral such as ETH, wstETH, rETH or cbBTC and borrow stablecoins. Unlike most lending markets, the main stablecoin rates are governance-set "transparent" rates that change by Sky governance decision, not by utilization. Spark keeps the list of collateral short; BTC e-mode was removed in June 2026 after a public notice period.

The Spark Liquidity Layer is the engine behind both. It moves USDS, USDC and USDT into and out of SparkLend, Savings and outside venues according to target rates and limits, which makes Spark the largest depositor in its own market. Every route is rate-limited in the contracts, and SparkLend prices collateral with a median of RedStone, Chainlink and Chronicle feeds, plus a kill switch that halts new borrowing if a liquid staking token drifts from its peg.

• Isolated Markets: lending pairs from Morpho shown inside the Spark app, each with its own risk.
• Institutional lending: an over-the-counter structure lending to institutions through custodians, with about $261 million deployed at the end of Q2 2026, according to Spark.

Spark charges users no deposit or withdrawal fee on SparkLend or Savings; the cost of using it is Ethereum or L2 network fees. Borrowers pay interest, part of which Spark keeps as a reserve factor. Spark Savings is described in its FAQ as fee-free, but the yield a depositor receives is what remains after Spark's own spread.

Spark's Q2 2026 report shows where the money comes from. Gross protocol returns were $40.6 million. After the cost of borrowing Sky's capital, net returns were $4.31 million, and after operating costs the surplus was $0.71 million. The largest net contributor was a 0.2% distribution payment on Savings V2 balances; Liquidity Layer revenue was slightly negative in the quarter, and SparkLend reserve-factor revenue was $245,000. Spark spent $1.31 million buying back SPK. How SparkLend compares with other lending venues is covered in our separate rating.

The website terms require users to be at least 18 and not subject to UK, UN, US, EU or Cayman-applied sanctions, and they bar use from any place where it would be unlawful or need a licence. Unlike several other DeFi front ends, the terms do not single out the United States as a prohibited country. There is no account or KYC; a self-custody wallet connects to app.spark.finance. The institutional lending product is arranged separately through Spark's institutions page.

SparkLend inherits the audits of Aave v3 (OpenZeppelin, Trail of Bits, PeckShield, ABDK and Sigma Prime) and adds a ChainSecurity review of Spark's own core changes. The Liquidity Layer controller and Savings Vaults V2 have been reviewed release by release by ChainSecurity and Cantina, and the reports sit in Spark's GitHub repositories. A bug bounty for SparkLend runs on Immunefi. Audits reduce risk; they do not guarantee that contracts are bug-free.

Control sits with Sky governance. Risk parameters, supply and borrow caps and listings for SparkLend are set through Sky's Atlas and executive "spells", and Sky's Pause Proxy holds part of the SPK supply. SPK holders vote on Snapshot for signaling only. Spark says collateral in SparkLend is never lent out to external strategies and that first-loss capital stands in front of depositors. Its treasury acts as junior capital that Sky requires before extending its credit line.

We found no exploit of Spark contracts in DefiLlama's records or Spark's documentation.

What can go wrong for a Spark user:

• Dependence on Sky: rates, caps and capital come from Sky governance. A Sky decision or a problem with USDS affects Spark directly.
• Allocation and credit risk: the Liquidity Layer and institutional lending send money to other protocols and to institutions off-chain, so a loss there can reach Spark's balance sheet.
• Smart contract risk across many contracts and several chains, including bridges.
• Liquidity risk: large Savings withdrawals beyond the idle buffer may have to wait for a Liquidity Intent to be filled.
• Liquidation risk for SparkLend borrowers: below a health factor of 1, half the debt can be liquidated at once, and all of it at or below 0.95.

Connect a wallet at app.spark.finance, open Savings or Borrow, and approve the deposit or loan in the wallet. Savings tokens can be withdrawn at any time for the underlying asset while the vault has idle liquidity. For amounts larger than that, Spark offers Savings Liquidity Intents, a request that Spark's allocation system fills later once it has freed up liquidity.

On SparkLend, repay the loan first and then withdraw collateral, keeping the health factor above 1 throughout. Positions on the deprecated Gnosis Chain market can still be withdrawn but no longer accept new supply or borrowing.

Spark points users to its Discord, the Spark section of the Sky forum, X (@sparkfinance), LinkedIn, YouTube and a contact form on spark.finance. Legal questions go to [email protected]. Spark's token page warns that sites offering SPK claims after the airdrop ended are scams.

Dated milestones from Spark's site, docs and filings:

• 9 May 2023: Spark website terms first published.
• 19 February 2025: SPK Company Ltd. registered in the British Virgin Islands.
• May to August 2025: SPK MiCA white papers versions 1 to 4 published.
• 17 December 2025: SPK airdrop claims closed.
• June 2026: BTC e-mode removed from SparkLend after a public notice.
• September 2026: SparkLend on Gnosis Chain fully deprecated.