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MakerDAO is a prominent player on the cryptocurrency market and a leader in decentralized finance (DeFi). Despite its significance in the blockchain industry, its token, MKR, did not experience a notable increase in January, unlike other altcoins. While some cryptocurrencies saw growth of over 100%, MKR had a modest 28% increase.
One of the reasons for this may be the rise of Lido DAO, a cryptocurrency staking platform that overtook MakerDAO in total value locked (TVL) on DeFi, driven by high excitement about the upcoming Ethereum (ETH) update.
Additionally, MakerDAO has yet to expand beyond the Ethereum network, which may limit its appeal to developers and users who prefer more scalable platforms.
Despite this, the fundamentals of MakerDAO remain strong, with its leading stablecoin, DAI, and functional Collateralized Debt Position (CDP) model. The CDP model enables users to lend DAI as collateral in exchange for Ethereum. The MakerDAO system manages the CDPs, and fees are incurred for using its smart contracts. The MakerDAO community governs the system in a decentralized manner, making decisions about monetary policies through voting.
As a result, MakerDAO remains a stable and secure alternative to traditional fiat currency lending and allows users to maintain exposure to crypto assets without being affected by price fluctuations. There are new developments in the works for MakerDAO that will further enhance its competitiveness.
Spark: Get to know new MakerDAO protocol
MakerDAO, like many other DeFi platforms, has been presenting proposals to its community this February. One such proposal is Spark, a protocol designed to bring attention to its flagship product, DAI.
The Spark Protocol promises to establish a highly liquid cryptocurrency lending market, offering users the option of fixed or variable rates. This innovation represents a revolution in the way people obtain and lend digital assets, making the process more accessible and flexible.
The proposal indicates that Spark will continue to evolve and develop over time, adding new features to the interface by integrating MakerDAO products and innovative DeFi solutions available on the market.
The first product under Spark is Spark Lend, a front-end lending marketplace that may compete with crypto lender Aave. Spark Lend will allow users to lend DAI at a fixed interest rate of 1% and will support highly liquid cryptocurrencies such as ETH, DAI and other wrapped assets as collateral.
Phoenix Labs, the developer of the Spark Protocol, intends to bring a novel feature to DeFi with capital-efficient flat rates. To achieve this, it plans to collaborate with fixed rate protocols such as Deco 4, Sense Finance 1 and Element Finance 2.
Only time will tell the full impact of Spark on the DeFi ecosystem, but its potential is definitely worth keeping an eye on.
Arman Shirinyan
Alex Dovbnya
Vladislav Sopov
Dan Burgin