We got the Q3 quarterly report for @sparkdotfi. Headline Q3 profit of $12.11m on $53.01m in revenue. So, how did Spark perform? I'd say not bad, with some caveats. Does SPK make sense as an investment? Probably not. Let's go through the highlights. First, Spark's main money maker: direct lending. You can click through for yourself, but the major revenue came from lending on Morpho and SparkLend, and holding syrupUSDC and (s)USDe. These brought in nearly all the profits, and appear to be fairly diversified. De minimus revenue contributions were made by SparkLend (the platform, not lending onto it), curator fees, and treasury operations. About $7.6m of the $12.1m profit comes from direct subsidies ($2.6m in rewards and a $5m grant). Once you back out these items, Spark booked about $4.5m in profits based on operations. That's still a net income margin of 8.5% after backing out the direct subsidies. That's not fantastic -- it's on par with many consumer staples and diversified energy companies like Pepsi, Constellation Brands, Exxon, and Chevron. Regional banks, which are probably a better comparable, tend to be in the 20-30% range right now. So Spark is not a particularly efficient operator. It's hard to know exactly why, because operational expense is not itemized. Phoenix Labs, the DevCo, looks like it gets ~$285k per month, and other visible expenses onchain by the Spark Foundation include Harris & Trotter (lawyers), BA Labs (risk consultants), and various marketers and other contributors. This is an area that there's probably some room to improve if Spark makes it a goal. Major risks I see: * @SkyEcosystem has made it clear they consider Spark's treasury to be system-wide junior capital. This means it serves as a second tranche of risk capital for non-Spark Stars like Grove, Keel, and all future ones. This introduces invisible leverage to Spark, and unclear how they can mitigate it. * Still unclear how the SPK token benefits. Spark shares @Uniswap's much-lamented dual equity-token structure. Phoenix Labs is paid every month. SPK holders are currently a source of financing via dilution. Getting on record with a promise here can only be good for token price. * While profitable without direct grants, Spark is still reliant upon subsidies from ecosystems like Optimism and Morpho. This would be helpful to be disclosed in more detail. * Entirely reliant upon below-market financing from Sky. Spark's sparkUSDC vaults are a good attempt to diversify with new funding sources, but so far it's too early to know if it works. * I'm still uncomfortable with major investments in assets that the Phoenix Labs team has stakes in. In general, a robust, public conflicts of interest policy would be good to build the Spark brand as safe and responsible. This is one where I think Spark (the project) will continue to move numbers in the right direction. It carries a lot of tail risk, though, from its own operations and from Sky/other Stars. It’s essentially a CeFi platform inside another CeFi platform. SPK, however, is just such an unclear value proposition and predestined for years of dilution. I don't know why you'd hold it here, much less buy it.

So… for me? I think @Tiza4ThePeople (less so these days bc busy) and @0ctoshi are great for the things I would look at. There are other accounts out there, but looking at vaults/protocols through a risk-adjusted lens is I think where it’s at. Can’t wait for @CredoraNetwork to get back up and running bc was helpful for sane Morpho depositing