How to Use SparkFi: Full Breakdown of Saving, Borrowing, and Liquidity Modules In our previous article ( ), we explored the overall positioning of SparkFi ( @sparkdotfi ) as more than just a lending protocol — it’s a decentralized capital coordination center. This “coordination ability” is delivered through its three core modules: Saving, Borrowing, and the Liquidity Layer Let’s dive deep into how each module works, what value it offers, and why Spark stands out in the DeFi landscape. 1. Saving Module: Foundation for Stable Yield Spark offers a simple yet efficient way to earn passive income. Users can deposit DAI or USDC into Spark’s saving vaults and earn stable yields (around 4.5% APY). ✅ Key Features: (1) No risk entry — no collateral or leverage required (2) Transparent and stable rates governed by the Sky DAO (3) Yield is generated through MakerDAO’s DSR and Spark’s liquidity reallocation Best for: Users who want a simple “deposit and earn” experience without active management. 2. Borrowing Module: Collateral-Backed Loans with USDS One of Spark’s core features is collateralized borrowing. Users can supply blue-chip assets to borrow USDS, Spark’s native stablecoin. Accepted Collateral Types: (1) ETH, stETH, cbETH, rETH, wstETH (Ethereum-based LSD assets) (2) MKR (governance token) (3) DAI (Maker ecosystem stablecoin) Borrowed Asset: USDS Key Features: (1) Collateral ratios and liquidation thresholds are governed by Sky DAO (2) Lower borrowing costs compared to Aave, tailored for long-term asset holders (3) Liquidation handled by Chainlink Oracles or equivalent systems Best for: Users with long-term LSD or blue-chip holdings who need stable liquidity. 3. Liquidity Layer: Capital Routing Logic for DeFi This is what truly differentiates Spark from other platforms. Spark doesn’t just manage internal liquidity — it routes surplus DAI/USDC to external protocols like Aave V3 across multiple deployments. The logic: you deposit stablecoins into Spark, and Spark selectively allocates part of that capital to external markets, generating additional yield — which is returned to you. Current integrations include: (1) Aave Prime (2) Aave Core (3) Aave Base How It Works: (1) Spark evaluates risk and deploys excess capital where yield is optimal (2) Yield generated is redistributed back to users (3) All flows are fully transparent and traceable on-chain Best for: DeFi-native users who prioritize long-term capital efficiency through composability and protocol-level yield. 4. Combined Strategies: Looping to Maximize Yield Saving Strategy (1) Action: Deposit DAI / USDC (2) Risk Level: Very Low (3) Yield: ~4.5% stable APY Borrowing Strategy (1) Action: Supply ETH or LSDs → borrow USDS (2) Risk Level: Medium (volatility + liquidation) (3) Yield: Unlocks liquidity for other uses Loop Strategy (1) Action: Deposit + Borrow + Re-deposit (2) Risk Level: Medium-High (3) Yield: Maximized through compounding and leverage Strategy Overview: Spark Use Cases by Risk & Return Example Strategy: (1) Deposit wstETH as collateral → borrow USDS (2) Deposit USDS into Spark’s Saving Vault (3) Earn stable yield while retaining your ETH exposure This is a classic DeFi loop strategy to optimize both leverage and yield. 5. How Spark Compares to Aave / Compound Product Design (1) Spark: Combines saving, lending, and external capital routing (2) Aave/Compound: Primarily lending-focused protocols Capital Utilization (1) Spark: Actively deploys excess funds into external protocols like Aave (2) Aave/Compound: Funds stay within the protocol Yield Model (1) Spark: Governed interest rate model tied to DSR, not fully market-driven (2) Aave/Compound: Fully supply-demand market-based rate dynamics Ecosystem Support (1) Spark: Backed by MakerDAO and Sky Protocol (2) Aave/Compound: Run by independent protocol communities ~~~~ What’s Next: $SPK Token and Airdrop Strategies Now that you understand Spark’s architecture and modules, our next article will explore: (1) Has the $SPK token launched? (2) How does the current “airdrop season” work? (3) What strategies are best for earning governance rewards? Stay tuned.