Research summary
The research assessment is adverse because reserve-level facts have not been verified, not because of a design flaw. SparkLend is an Ethereum Aave v3 fork with Sky-governed parameters and unusually deep stablecoin liquidity supplied through Sky. Current evidence shows that a SparkLend supplier is not a pro-rata investor in the Spark Liquidity Layer’s CeFi or RWA book. Spark says assets supplied to a SparkLend reserve stay there. The SLL can add or remove its own liquidity, but it does not redeploy the client’s aToken claim. The relevant risks are therefore Aave-style borrower bad debt, collateral and oracle failure, governance or upgrade action, available cash at exit, and, for DAI or USDS exposure, the Sky balance sheet and peg. The architecture is credible, but a recommendation still needs a position-specific asset choice and live liquidity test rather than protocol-wide approval.
Observable review triggers
- Any selected reserve with unresolved bad debt, an unbacked aToken balance, or a failed proposed-size withdrawal
- USDS depeg beyond 1% for more than 24h
- Utilization above 90% for 30 days in the selected reserve, or an emergency freeze lasting more than 24 hours
- A selected collateral oracle running without the documented multi-feed or ratio-killswitch protections
- Any unaudited upgrade to a custom oracle, rate strategy, cap automator, or pool implementation used by the selected reserve
Facts on file
- Verdict
- Rejected
- Type
- Dollar lending
- Chains examined
- Ethereum
- Instruments
- USDC, USDS, DAI, WETH
- Reviewed
- Last confirmed