.@sparkdotfi plans to directly hold up to 1.10 billion USD in USDe and sUSDe tokens from @ethena_labs. 🤔

The risk team behind $DAI, @BlockAnalitica, recommends setting the upper limit for Spark's direct holdings at 20% of the smaller amount between USDS + $DAI or the supply of USDe. This allows Spark's liquidity layer to directly convert $USDC into USDe/sUSDe to earn Ethena rewards, significantly improving capital efficiency (with sUSDe's average APY reaching up to 18% in 2024).

As part of the same plan, Spark has approved the allocation of 200 million $DAI to the May PT sUSDe market of @pendle_fi through Morpho.

Spark is a lending protocol supported by Maker DAO that provides liquidity to some major DeFi platforms such as Aave, $Morpho, and Base, and it has not yet issued tokens.

This collaboration follows research conducted by $DAI's risk team. Spark is no longer participating indirectly through providing lending markets, representing its team's acknowledgment of the safety of USDe and sUSDe and responding to market demand. More protocols are expected to integrate Ethena's products. 🔥

The disruption caused by Terra Luna has made many investors cautious about new stablecoins. The algorithmic minting/burning system based on LUNA used by Terra has an unavoidable "death spiral" flaw. In contrast, Ethena maintains the stability of USDe by utilizing external collateral assets and hedging strategies, which is fundamentally different in mechanism. Ethena's native token, $ENA, is not directly related to the protocol's payment capacity, isolating the impact of price performance on the stability of USDe/sUSDe. Ethena's collateral assets have been diversified to include BTC and USDT in addition to ETH, enhancing resilience in volatile markets. Ethena plans to integrate with traditional finance by 2025, further expanding the market and enhancing stability.