Spark Interest Rates

Market vs Policy Interest Rates

Market Rates: All non-USDS and non-DAI assets on Spark use market-determined interest rates that adjust dynamically with utilization—just like on Aave or Morpho. As borrowing demand rises and utilization increases, rates climb to attract more liquidity; when demand falls, rates decline.

Policy Rates: In contrast, USDS and DAI follow a policy-driven rate model. Their rates are set directly through governance rather than by market utilization.

• Sky Governance sets the Dai Savings Rate (DSR) and Sky Savings Rate (SSR)—these define the liquidity rate that suppliers (Maker/Sky) earn in Spark.

• Spark Governance sets a fixed borrow spread, which is added on top of the DSR or SSR to determine the variable borrow rate paid by borrowers.