# Why Ketju rejected SparkLend

- URL: https://riadefi.com/rejections/sparklend/
- Exposure: stable lending
- Memo version: v1
- Reviewed: 2026-08-16
- Next review: 2026-11-16

## The memo

REJECTED FOR UNVERIFIED RESERVE-LEVEL FACTS, not a design flaw. SparkLend is an Ethereum Aave v3 fork with Sky-governed parameters and unusually deep stablecoin liquidity supplied through Sky. This review corrects the previous memo: a SparkLend supplier is not a pro-rata investor in the Spark Liquidity Layer's CeFi or RWA book. Spark says assets supplied to a SparkLend reserve stay there; the SLL can add or remove its own liquidity but does not redeploy the client's aToken claim. The relevant risks are therefore Aave-style borrower bad debt, collateral and oracle failure, governance or upgrade action, available cash at exit, and — for DAI or USDS exposure — the Sky balance sheet and peg. The architecture is credible, but a recommendation still needs a position-specific asset choice and live liquidity test rather than a protocol-wide approval.

## What would reopen the file

- Any selected reserve with unresolved bad debt, an unbacked aToken balance, or a failed proposed-size withdrawal
- USDS depeg beyond 1% for more than 24h
- Utilization above 90% for 30 days in the selected reserve, or an emergency freeze lasting more than 24 hours
- A selected collateral oracle running without the documented multi-feed or ratio-killswitch protections
- Any unaudited upgrade to a custom oracle, rate strategy, cap automator, or pool implementation used by the selected reserve

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Published by Ketju Research (https://ketjuresearch.com). Educational analysis only; not legal, tax, compliance, or investment advice.
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