MakerDAO Announces Spark Protocol, Its Aave Competitor

DeFi giant MakerDAO announced it will launch a new lending protocol called Spark Protocol, which aims to compete with Aave. Spark Protocol is expected to roll out later this year and will offer a more flexible borrowing experience than the current MakerDAO system.

During this crypto winter, the DeFi giants are encroaching on each other’s territory. Aave encroached on MakerDAO with its new stablecoin, GHO, which it recently deployed to Ethereum’s Goerli testnet. Now MakerDAO is coming after Aave’s lending business using a fork of Aave’s v3 code.

According to MakerDAO founder Rune Christensen, Spark Protocol is part of the company's vision to create a more inclusive and accessible financial system. He stated that “by removing barriers to access and providing a more flexible borrowing experience, Spark Protocol will make it easier for users to enter and participate in DeFi.” He’s using Aave’s code and pretending that Aave doesn’t already exist.

The launch of Spark Protocol is likely to attract a lot of attention from the DeFi community, but ultimately I'm not sure people will migrate away from Aave without serious incentives. For the time being, it seems like everyone's positions are in maintenance mode. Either way, MakerDAO will be in a good position to capture new users during the next bull run, because we know for a fact that crypto investors love leverage.