If you're borrowing DAI in DeFi, you're likely paying a premium passed on from an underlying protocol. The Spark Protocol Official changes this. As a front-end for the MakerDAO Ecosystem, it allows you to interact directly with Maker's credit facility, giving you access to the most competitive rates.
Core Concept: Direct Access to MakerDAO
Spark is not a typical lending protocol with its own liquidity pools. It's a direct interface to MakerDAO. This means when you engage in a Spark Borrow DAI transaction, you are borrowing directly from the source, and the interest rate is closely tied to the official DAI Savings Rate (DSR), not manipulated by third-party pool utilization.
Step-by-Step Guide: How to use Spark Protocol
Navigate and Connect: Go to the Spark.fi app and connect your Web3 wallet.
Supply Collateral: Select a high-quality asset to supply as collateral, such as ETH or stETH. Enter the amount you wish to supply and confirm the transaction. This action provides you with borrowing power.
Borrow DAI: Go to the "Borrow" section. You will see your available borrowing limit based on the collateral you supplied. Enter the amount of DAI you wish to borrow and execute the transaction.
You have now borrowed DAI at one of the most capital-efficient rates in all of DeFi.
Earning Yield with sDAI
When you supply DAI to the protocol, you receive sDAI. A look at sDAI Explained shows it's Spark's tokenized version of the DAI Savings Rate. It's a liquid token that automatically accrues the yield from the DSR, allowing you to earn native MakerDAO yield while remaining liquid.
For a full breakdown of the architecture, please refer to the https://sites.google.com/koinly-tax-reports.org/spark-protocol/.
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