This past weekend, DeFi experienced a terrible exploit of the LayerZero OFT (Omnichain Fungible Token) bridge which led to minting over 116,500 unbacked rsETH ($292M). The resulting chaos allowed hackers to borrow an estimated 82,600 ETH from Aave V3, leading the V3 WETH pool on Ethereum Mainnet to hit 100% utilization, triggering Aave to freeze WETH supply and borrow contracts holding ~$6B on Ethereum Mainnet, all while fear of contagion spread across DeFi. That doesn’t even account for all the other ETH frozen as a protective measure in Aave V3 across L2s such as Arbitrum ($326M), Base ($202M), Mantle ($107M), and Linea ($32M). It was a sobering reminder that risk management in this industry still matters enormously.
However, the third largest money market on Ethereum, SparkLend, had no rsETH collateral exposure. They deprecated rsETH along with other low-usage assets in January. As a result, Spark’s $3.67B total market size escaped the contagion so far, and managed to buck the trend of major liquidity outflows all weekend after an initial $134M outflow, rebounding today with $257M in inflows. Spark did see a spike in ETH borrow rates but within less than 24 hours post rsETH’s exploit, they settled back down to reasonable pre-panic rates of 2-4%.
So DeFi isn’t dead but it’s clearly taken a massive hit as our most reputable king Aave experiences an enormous systemic failure and still faces unresolved bad debt, with no formal plan still announced as I’m writing this this post around 12 am EST, 36 hours after the LayerZero attack.
Coincidentally two weeks ago, long before this rsETH exploit, we recorded a new Revenue Meta episode on The Edge Podcast with Sam MacPherson. Sam is CoFounder and CEO of Phoenix Labs, the core team behind Spark, Sky's largest sub-DAO and one of the most battle-tested protocols in DeFi.
So instead of holding back this episode until the news cycle dies down, we thought there's no better time to be learning about how Spark is building a resilient, revenue-generating DeFi money market and savings protocol.
In this episode, Sam walks us through the full business of Spark: $27.8M in projected annual revenue across four business lines, a $9.6M protocol surplus (up now to $14.2M) being returned to SPK token holders through programmatic buybacks, a 23-person team, and a $2.3 billion Spark Liquidity Layer deployed across DeFi, CeFi, and TradFi. Sam shares more on their plans for growing Spark this year, including tripling Spark Savings USDT (sUSDT), plus details on Spark Prime, a new CeDeFi prime brokerage.
During our recording, they were projecting $23M in annual revenue, what the protocol takes home after paying out all fees to Spark Savings users and lenders. Since then, it’s risen 20% to $27.8M but keep in mind, during the 2025 bull run it was as high as $80M.
Sam thinks they can get back to $80M and much higher, but you’ll have to listen to this new Edge Podcast to hear how in our podcast series we call Revenue Meta!
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🔗 Guest Links 🔗
► Spark website: spark.fi/
► Spark Data Hub: data.spark.fi/
► Spark Financials: data.spark.fi/financials
► Spark on X: x.com/sparkdotfi
► Sam MacPherson on X: x.com/hexonaut
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DISCLAIMER: Nothing written in The Edge Newsletter or said on The Edge Podcast is a recommendation to buy or sell tokens or securities. This content is for educational and entertainment purposes only. Nothing shared here is financial advice. Any views expressed in our content are solely the opinion of that writer, host, or guest. Always do your own research. DeFi Dad, Nomatic, and guests may have positions in the assets or other matters discussed in this content.
