ARC Spark Lend Profit Share Proposal

The newly proposed Phoenix Labs, an R&D company building the Spark Protocol upon the foundations of the Aave v3 codebase to deploy Spark Lend, a liquidity protocol centered around DAI.

We propose a profit sharing of 10% of the gross profits (cost paid to DAI suppliers subtracted from the revenue generated by DAI borrows) from the DAI market in Spark Lend.

The profit share will take effect when the DAI market size reaches 100 million and will expire two years later.

• DAI market = portion of the pool with underlying asset ERC-20 DAI
• Profit = Gross Profit = Revenue - COGS
• Revenue (B) = revenue from borrows in the DAI market
• COGS (S) = Cost of Capital = amount paid to suppliers in the DAI market
• Profit share = 10%
• Minimum DAI borrows = 100 million DAI
• Duration = 2 years after reaching minimum DAI borrows

Profit share paid to Aave = 10% * (B - S)

We want to present two options for the Aave community to consider. The latter splits a minority of the profit share to purchase AAVE tokens to align both organizations further.

1. Entire profit share direct payment in DAI to the Aave Treasury at address 0x464C71f6c2F760DdA6093dCB91C24c39e5d6e18c
2. Split between direct payment and purchase of AAVE
   1. 8% profit share direct payment to the Aave Treasury at address 0x464C71f6c2F760DdA6093dCB91C24c39e5d6e18c
   2. 2% profit share used to purchase AAVE tokens held in the Spark Protocol Treasury