Spark Savings

Spark Savings Vaults Overview

Spark currently supports the following Savings Vaults:

Spark Savings Vaults (V2)

Spark Savings Vaults V2 (spUSDC, spUSDT, spETH) utilize the Spark Liquidity Layer (SLL) to deploy deposited assets into yield strategies. The SLL is designed to generate yield across Spark's entire balance sheet by strategically allocating assets across various protocols and yield strategies to optimize returns while maintaining liquidity and managing risk.

USD vaults are fully backed by USDS. Non-USD vaults are backed by Spark's balance sheet and insurance.

You can find an overview of the collateral composition for each vault on the Savings page in the Spark App.

Currently, Savings USDS, Spark USDT, and Spark ETH earn Spark Points. Other savings vaults do not currently earn Spark Points.

Conservative & Secure

• Minimizes exposure to riskier collateral (e.g., perpetual futures) to protect against market stress
• Backed by a mix of DeFi and RWAs to outperform traditional DeFi lending rates

Institutional-Grade Liquidity

• Backed by Sky's balance sheet to faciliate 24/7 withdrawals at any individual depositor's size
• Enables large-scale transactions ($100M+) without significant market impact
• Leverages the Spark Liquidity Layer's deep liquidity across multiple protocols

Multi-Asset Support

• USD stablecoins (USDC, USDT, PYUSD)
• ETH

First Loss Capital

USDS (and Spark Savings) has multiple layers of protection for loss events, starting at the Prime level.

Layer 1 – Internal Junior Risk Capital (Prime-level): Junior Risk Capital is the first capital to absorb losses on investments under the Allocation System. Each Prime is responsible for holding junior capital in its treasury in proportion to its risk-weighted allocations, which serves as a first line of defense in the event the allocation incurs losses. Spark is well-capitalized, with over $35 million in stablecoin equity capital.

Layer 2 – Prime-External Junior Risk Capital: Primes can source additional Junior Risk Capital from other Primes. This risk capital sits at equal preference with the Prime's Internal Junior Risk Capital, helping cover losses related to the Prime's allocation and risk exposures.

Layer 3 – External Senior Risk Capital (srUSDS): This feature is planned for deployment in the near future. External Senior Risk Capital is provided from the srUSDS smart contract, which allows users to supply USDS to Sky Core to serve as senior risk capital, beginning to absorb losses only after Junior Risk Capital has experienced 100% losses.

Layer 4 – The Surplus Buffer (Internal Senior Risk Capital): The Sky Protocol Buffer — known as the Surplus Buffer — is an accumulation of stability fees and liquidation penalties held by the protocol to cover bad debt in the event of residual losses.

Layer 5 – Aggregate Surplus Buffer: After the surplus buffer is exhausted, losses are covered via Sky's Aggregate Surplus Buffer, which allows Sky to encumber the portion of other Primes' Internal Junior Risk Capital that was seeded by Sky to cover critical loss events.

Layer 6 – Token Backstop: If losses exceed the sources of risk capital above, Sky will mint SKY tokens to recapitalize the protocol and cover any residual bad debt.

Equitable Loss Socialization: If, and only if, all other sources of Junior Risk Capital and token backstops are exhausted, any residual losses are applied equally across all USDS holders, including Spark Savings stablecoin vaults (which are fully backed by USDS).

The Sky ecosystem's multi-layered approach to capital backstops provides high assurance that Spark Savings vault users will not incur losses. Taking the sum of all sources noted above, Spark Savings vaults are covered by several hundred million dollars worth of protection against losses and risk events.

Liquidity

Spark Savings vaults maintain industry-leading levels of instantly available liquidity, making them suitable for institutional use cases. The Spark Savings USDT vault maintains an instant liquidity buffer of over 400 million USDT available for redemptions, while the Spark Savings USDC vault has capacity for billions of dollars of redemptions via integration with the Sky PSM.

Savings Vault contracts maintain a liquidity buffer of up to $10 million to serve typical withdrawal volume via atomic redemptions. For larger-scale withdrawals, Spark offers an asynchronous liquidity intents mechanism allowing users to sign a withdrawal request for any amount, with the withdrawal then fulfilled rapidly via the Spark Liquidity Layer; in most cases, large withdrawal requests are filled in less than 1 minute (5 Ethereum blocks).

Transparency and Third-Party Ratings

Spark Savings vaults operate with industry-leading transparency into backing assets and related allocation strategies. Real-time data on Spark and Sky backing is available via various open resources, including:

• Spark Data Dashboard: data.spark.fi
• Sky Info Dashboard: info.skyeco.com
• Spark App: app.spark.fi

Additionally, Spark has secured ratings for Spark Savings products from Credora, an independent, leading crypto-native risk ratings provider.

Incident Response

In the event of a potential loss affecting Spark Savings vaults, Spark can put vaults into recovery mode to mitigate risk. Temporarily halting withdrawals ensures that all users receive equal treatment and avoids bank run scenarios.

Spark Savings Vaults V1 (Legacy)

The Savings USDC vault (sUSDC) is a legacy V1 vault that deposits USDC into the Sky Savings Rate. Users are encouraged to migrate to Spark Savings Vaults V2 for enhanced features. However, sUSDC will continue to be supported as a legacy vault.

Sky Savings Vaults

These vaults (sUSDS, sDAI) deposit directly into the Sky/Dai Savings Rate. They offer simple, reliable access to Sky's yield with rates set by Sky Governance. Savings DAI (sDAI) is a legacy vault, and users are encouraged to migrate to newer vaults.

Staked USDS

This is a higher-yield, higher-risk product offered by Sky. stUSDS lends USDS exclusively to borrowers using SKY tokens as collateral. While it may offer higher APY than other vaults, it carries increased risk including potential liquidity constraints and lack of automatic liquidations.

FAQ

What's the difference between Spark Savings Vaults V2, V1, and Sky Savings Vaults?

Spark Savings Vaults V1 only supported USDC, depositing it into the Sky Savings Rate. V2 expands this to any asset — USDC, USDT, PYUSD, ETH, and more — using the Spark Liquidity Layer to deploy assets across optimized yield strategies. All Spark Savings USD vaults (V1 and V2) are backed by USDS, giving them the same underlying risk profile regardless of which stablecoin you deposit.

Do I need to migrate my funds to Spark Savings Vaults V2?

You can continue using your current vaults.

Where does Spark Savings Vaults V2 allocate my deposits?

Spark Savings Vaults V2 deploy your deposits through the Spark Liquidity Layer (SLL), which is designed to generate yield across Spark's entire balance sheet. The SLL strategically allocates assets across various protocols and yield strategies to optimize returns while maintaining liquidity and managing risk. You can see an overview of the collateral composition for each vault on the Savings page in the Spark App.

How are vault rates determined and how often do they change?

• Rates are managed by Spark Governance based on market dynamics and underlying yield strategies

• Rates are set by Sky Governance based on Sky Protocol's revenue from crypto-collateralized loans, U.S. treasury bills, and liquidity provisioning
• Changes are made by Sky Governance and updated as needed

• Rates are set by Sky Governance based on Sky Protocol's revenue from crypto-collateralized loans, U.S. treasury bills, and liquidity provisioning
• Changes are made by Sky Governance and updated as needed

How does the Spark Liquidity Layer ensure liquidity?

The Spark Liquidity Layer is designed to always maintain sufficient liquidity for vault deposits and withdrawals. It does this by:

• Keeping a sufficient liquid reserve to cover all expected withdrawals at any given time
• Borrowing from Sky's balance sheet and potentially swapping to shore up liquidity in emergency situations
• Dynamically managing asset allocations across integrated protocols
• Maintaining strategic liquidity reserves

This ensures users can always enter and exit vaults, even for large transactions.

Is there slippage on deposits and withdrawals?

When you deposit a token into its native vault, there is no slippage. For example:

• Depositing USDC into Spark USDC (spUSDC) or Savings USDC (sUSDC)
• Depositing USDT into Spark USDT (spUSDT)
• Depositing USDS into Savings USDS (sUSDS)
• Depositing ETH into Spark ETH (spETH)

Are vault tokens transferable?

Yes, all vault tokens are standard ERC-20 tokens that can be transferred, or integrated into other DeFi protocols. Your vault tokens represent your share of the vault and will continue accruing yield wherever they are held.

Can I withdraw at any time?

There are no lockup periods for any of the Savings Vaults. Spark Savings Vaults V2 keep an idle liquidity buffer in the vault for instant withdrawals. For larger withdrawals from Spark Savings USDC and Spark Savings USDT on Ethereum Mainnet that exceed the currently available idle liquidity, the app can submit a Savings Liquidity Intents request to the Spark Liquidity Layer, which is usually fulfilled within a few minutes. Learn more about Savings Liquidity Intents.