MakerDAO-powered lending platform Spark Protocol onboards Rocket Pool staked ETH as collateral option MakerDAO-powered lending platform Spark Protocol onboards Rocket Pool staked ETH as collateral option
MakerDAO also raised the protocol's borrowing power by 400%.
2 min read
Updated: Jun. 23, 2023 at 7:49 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
MakerDAO (MKR) has announced that Spark Protocol is onboarding Rocket Pool’s staked Ethereum (rETH) as a new collateral type, creating increased opportunities for users to leverage their digital assets in the DeFi ecosystem.
Expanding the lending ecosystem
Founded in 2015, MakerDAO is best known for issuing the decentralized stablecoin, DAI. The latest development in its partnership with Spark Protocol allows users to utilize their rETH holdings as collateral to borrow DAI at competitive rates, while simultaneously earning staking yield.
Rocket Pool (RPL) is a decentralized Ethereum staking pool that provides users with rETH, a tokenized version of staked Ethereum. With over 740,000 ETH currently staked in the protocol, the addition of rETH as a collateral type on Spark Protocol furthers MakerDAO’s commitment to providing diverse collateral options for borrowing its DAI stablecoin.
Sam MacPherson, CEO of Phoenix Labs, the leading contributor to Spark Protocol, hailed the development as a step forward for Ethereum’s liquid staking options.
MacPherson stated:
“This not only diversifies Ethereum’s liquid staking options but also strengthens the decentralization and security of our system. For DeFi users, this offers another means of borrowing DAI and availing of leading interest rates thanks to Spark’s unique position in securing liquidity directly from the Maker Protocol’s credit line.”
The onboarding of rETH as collateral coincides with Maker Governance’s decision to increase the amount of DAI that Spark Protocol can borrow, reinforcing the symbiotic relationship between the two DeFi platforms.
Launched in May, Spark Protocol has quickly made a name for itself by providing the infrastructure for Spark Lend, a decentralized lending marketplace with a focus on DAI. In addition to facilitating direct borrowing of DAI against various assets, users can also deposit ETH, earn fees, avail of the recently increased DAI Savings Rate (DSR), and swap stablecoins such as DAI or USDC with no slippage.
MakerDAO’s real-world asset strategy
This expansion comes as MakerDAO continues to bolster its own treasury holdings with U.S. government debt. In recent months, MakerDAO has increased its holdings of U.S. Treasury bonds from $500 million to $1.2 billion, marking a strategic pivot towards traditional, low-risk assets as a way of diversifying its collateral pool.
The decision to expand MakerDAO’s exposure to real-world assets was made following an incident where its stablecoin, DAI, momentarily lost parity with the U.S. dollar. This move to diversify its holdings is seen as part of MakerDAO’s broader strategy to become more resilient in the face of market volatility.
Allan Pedersen, CEO of Monetalis Group, which carried out the bond purchase on behalf of MakerDAO, described the decision as a “strong, reliable, and flexible solution” that will generate more revenue for the protocol.
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Jacob Oliver
Jacob Oliver is a recovering academic and English teacher turned crypto journalist and web3 writer. He holds a Ph.D. from the University of Washington.
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Maker is a decentralized autonomous organization on the Ethereum blockchain seeking to minimize the price volatility of its own stable token — the Dai — against the IMF’s international currency basket SDR.
Dai
$1.00008
Dai (DAI) is a cryptocurrency token and operates on the Ethereum platform.
Maker is a Decentralized Autonomous Organization that creates and insures the dai stablecoin on the Ethereum blockchain.