[Ethereum] SparkLend - Increase cbBTC Supply and Borrow Caps - October 20, 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:

cbBTC is currently the 3rd largest collateral asset on SparkLend, behind wstETH and ETH. It is a wrapper of BTC, the largest and most liquid crypto asset. Spark already has a deep relationship and significant exposure to the issuer Coinbase via the Spark USDC Morpho vault on Base as well as indirectly via the Sky USDC PSM which holds funds with Coinbase Prime.

Usage has been increasing steadily in the past months, from a local low of 2,000 cbBTC in August to current levels around 7,600 cbBTC. With the current supply cap max set to 10,000 cbBTC, there is relatively little remaining capacity for new borrow demand. We propose to increase the supply cap max to 20,000, while maintaining an unchanged supply cap gap (instantly available supply, which is refreshed every 12 hours per the ttl parameter) to limit the pace of exposure growth and allow Spark governance to intervene if market or liquidity conditions for cbBTC become less favorable.

While cbBTC has seen limited borrow usage to date, we also propose to increase the borrow cap max to 10,000 to allow the market to reach moderate utilization levels if borrowing demand develops in the future (for example, via yield looping trades against LBTC). Borrow cap gap will also remain unchanged to prevent rapid increases in cbBTC borrowing and limit this collateral’s exposure to tail risk from other assets within SparkLend.

Parameter summary:

• SparkLend cbBTC
  • Supply cap max: 20,000
  • Borrow cap max: 10,000

The proposed Spark Artifact changes can be found in the following pull request: https://github.com/sky-ecosystem/next-gen-atlas/pull/80

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.