Savings DAI Surpasses $1 Billion in Total Value Locked

In a significant milestone for decentralized finance (DeFi), Savings DAI, the yield-bearing iteration of MakerDAO’s decentralized stablecoin, has achieved a remarkable total value locked (TVL) of over $1 billion. This groundbreaking news was recently revealed by SparkDAO, a lending market built on DAI and the inaugural MakerDAO subDAO. Notably, sDAI tokens garner interest through the DAI Savings Rate (DSR), with yields designed to decrease as adoption grows. SparkDAO maintains governance over Savings DAI.

Sam MacPhenson, the CEO of Phoenix Labs, the team behind Spark Protocol, expressed enthusiasm for this achievement, stating, “Despite challenging market conditions, Maker and Spark have experienced impressive growth and garnered significant interest from the DeFi community.”

Spark Protocol Emerges as a Leading DeFi Player

Spark Protocol boasts a TVL of $440 million, solidifying its position as the fifth-largest DeFi protocol, according to DeFi Llama. However, the journey to this milestone has had its ups and downs.

In early August, MakerDAO made a strategic move by increasing DSR yields to 8% to stimulate DAI adoption and reverse its persistent decline in market capitalization. This change followed an earlier hike from 1% to 3.3% in May. Although the rate adjustment promptly boosted the adoption of Spark Protocol and sDAI, Rune Christensen, MakerDAO’s founder, recommended capping DSR yields at 5% within 48 hours of the rate increase.

DAI’s Market Cap Decline Despite Rate Hike

Despite the optimistic yield adjustments, data from Dune Analytics reveals that the TVL in Maker’s DSR has surged by a staggering 1,170% since June 19, while the circulating supply of DAI has witnessed a 13.6% decrease over the same period. This trend suggests that existing DAI holders constitute the majority of sDAI holders, as opposed to new users. Additionally, DAI’s market capitalization has dwindled by 62% since its all-time high in February 2022, when it reached $3.8 billion, according to CoinGecko.

Nevertheless, Maker’s native token, MKR, has experienced consistent price gains recently. MKR is trading at $1,452, marking a remarkable 111% surge since June 30.

Multi-Chain Expansion Plans for Spark Protocol

Looking ahead, Spark Protocol is exploring opportunities for expansion across various chains within Ethereum’s broader ecosystem to attract new users. On September 18, MakerDAO governance unanimously approved a preliminary proposal to deploy Spark on Gnosis Chain, an Ethereum side-chain. Furthermore, Polygon has published a proposal advocating for Spark’s integration into its flagship Layer 2 network, Polygon zkEVM. However, progress on this front appears to have stalled since the initial proposal in August.

In summary, Savings DAI’s achievement of $1 billion in TVL is a testament to the growing prominence of DeFi platforms, albeit accompanied by the challenges of retaining and attracting users in the rapidly evolving crypto landscape. With plans for multi-chain expansion, Spark Protocol aims to remain a key player in the DeFi sector, potentially reshaping the DeFi landscape further.