SAEP-03: Modify Spark Liquidity Layer Core Relayer and Freezer Multisig Configuration - November 3, 2025

Spark's Operational Facilitator has placed a proposal into the voting system on behalf of nested contributor Phoenix Labs.

Review

The Spark community can hereby express support or opposition to the following changes, as described by the author of the proposal:

Summary

This proposal is submitted by Phoenix Labs in its role as a nested contributor, as defined in section A.AG1.2.2.P6.2.1.2.1.1.1 of the Spark Artifact. The proposal recommends that Spark governance adopt a plan for managing parameters for vaults released using the Spark Savings v2 infrastructure.

Background

Spark recently released Spark Savings v2 vaults, an updated vault infrastructure that allows for supporting additional assets vs Savings v1, which only supported sUSDC as a wrapper on the Sky Savings Rate. Deposits into v2 vaults are routed directly into the Spark Liquidity Layer, which can allocate the funds across whitelisted assets and protocols similarly to how Spark allocates capital from Sky via the allocation vault.

Savings v2 introduces flexibility in setting the rewards rate for vault deposits, as well as the amount of funds maintained within the vault to support instant withdrawals. Spark governance is empowered to adopt a framework for how these parameters and strategies are configured to best support the sustainable growth of Spark Savings.

Updating the rewards rate for vaults is controlled via the setter role, which initially will be assigned to the Spark operations multisig before being transferred to the ALM Proxy once the contract has been updated to support this functionality. Withdrawal liquidity for the vault is controlled via the taker role on the vault (for moving funds from the vault to the Spark Liquidity Layer to be allocated) and the ALM Proxy’s transferAsset rate limit for the underlying vault asset with the vault as recipient (for moving funds back to the vault to facilitate withdrawal liquidity).

Proposal Details

We propose that Spark governance set a target liquidity buffer for each vault at 10% of vault deposits, with a minimum liquidity buffer of 1 million for stablecoin vaults (spUSDC, spUSDT) and a minimum liquidity buffer of 250 ETH for spETH.

We also propose that Spark governance adopt a rate management policy for Spark Savings vaults, where the approved setter role for each vault updates the rates according to a preapproved framework. Specifically, we propose that for stablecoin vaults, Spark governance sets the rate to match the Sky Savings Rate (currently 4.75%, variable based on Sky governance decisions and the SP-BEAM mechanism). For spETH, we propose that Spark governance set the rate to match 90% of the SparkLend ETH market supply rate.

Finally, we include language in the Spark Artifact to specify the onchain implementation and parameters for Spark Savings as they were approved in the previous executive votes from 2 October and 16 October 2025.

Justification

Functionality for setting rates and managing liquidity is constrained by address whitelists, transfer rate limits, and rewards rate upper and lower bounds that are implemented at the smart contract level and controlled by Spark governance. Having Spark governance decide on the high level strategy for parameter and liquidity management gives Spark Savings users greater certainty over how the vault will operate within these bounds, and simplifies the process for maintaining of the Savings Vaults via the operations multisig and ALM Planner software.

For liquidity maintenance, we propose that a 10% initial liquidity buffer (bounded to be at least $1 million in value for stablecoins or similar value in ETH) would support good user experience, while still allowing Spark to generate a return to support the Spark Savings vault rewards using a majority of deposited assets. There is a tradeoff between liquidity availability and capital efficiency, and the liquidity buffer ratios for each vault can be dialed in and optimized over time as usage data is gathered after launch.

For rates, we submit that aligning the stablecoin vault rates with the Sky Savings Rate is sensible given this is the overall benchmark for savings within the Sky ecosystem, and is generally fairly well aligned with the broader market for low risk defi yield opportunities. We submit that setting the spETH rewards rate equal to 90% of the SparkLend ETH supply rate will align the vault rewards paid out with Spark’s initial yield generation strategy (which will forward all vault deposits besides the target liquidity buffer into SparkLend ETH). In each case, there is little to no risk of the selected rate resulting in Spark running the vaults at a material deficit.

The proposed Spark Artifact changes can be found in the following pull request: https://github.com/sky-ecosystem/next-gen-atlas/pull/101

Outcomes

• If "For" receives the most votes, the proposal will be approved. The associated pull request will be merged into Spark's artifact. When required, the listed changes will proceed to implementation by the relevant actors.
• If "Against" receives the most votes, the proposal will be rejected. No changes will be implemented.