Spark proposes larger backstop and liability-adjusted buyback accounting

What happened

Phoenix Labs proposed increasing Spark's product backstop and deducting accrued, unwithdrawn Spark Savings yield liabilities before calculating excess proxy capital.

What changed

The backstop input would rise from 1 million to 5 million USDS. Monthly valuation would occur on the first day, with subsequent buyback transfers purchased through a 90-day TWAP.

What did not change

The proposal does not prove adoption, capitalization or executed buybacks. Existing risk-capital and operational-reserve obligations remain.

Confirmed

• SAEP-23 specifies both the backstop increase and the accrued-liability deduction.
• The proposed valuation time is 16:00 UTC on the first day of each month.
• The proposal preserves existing buyback rates and requires subsequent governance processing.

Still open

• Approval and effective policy date.
• Liability measurement quality and the resulting reduction in distributable capital.
• Custody and execution controls during overlapping 90-day buyback programs.

What it means for an advisor

• Monitor reserve adequacy and liability recognition in the Sky/Spark diligence files.
• Do not treat the proposed backstop increase as funded protection or a guarantee of depositor recovery.