[Ethereum] SparkLend - Remove Supply and Borrow Caps for Non Collateral Stablecoins (USDC, USDT, PYUSD) - 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:

Because USDC, USDT, and PYUSD are not usable as collateral, implementing supply caps for these assets doesn’t provide a meaningful risk mitigation benefit to SparkLend. And while there is some marginal benefit from using borrow cap automations (reducing the maximum amount of each asset that can be borrowed at any one time), we expect that utilization will approach 90-95% in equilibrium, close to the optimal utilization ratio. This implies that the ultimate risk benefit for borrow cap automation is quite limited for these assets, and on balance the negative impacts for UX and additional operational overhead to maintain these limits outweighs the risk mitigation benefits.

We propose to remove borrow and supply caps and related automation for USDC, USDT, and PYUSD on SparkLend.

Parameter summary:

• SparkLend USDC
  • Remove supply and borrow cap automation
  • Supply cap: 0 (no cap)
  • Borrow cap: 0 (no cap)
• SparkLend USDT
  • Remove supply and borrow cap automation
  • Supply cap: 0 (no cap)
  • Borrow cap: 0 (no cap)
• SparkLend PYUSD
  • Remove supply and borrow cap automation
  • Supply cap: 0 (no cap)
  • Borrow cap: 0 (no cap)

The proposed Spark Artifact changes can be found in the following pull request: https://github.com/sky-ecosystem/next-gen-atlas/pull/84

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.