Spark Finance is pulling the plug on its Gnosis Chain lending deployment. As of September 14, 2026, SparkLend on Gnosis will be fully deprecated, and any outstanding loans will become eligible for liquidation once a Sky governance spell executes.
For users still holding positions on the Gnosis instance, the message is simple: repay your debt before the cutoff, or face forced liquidation.
How we got here
SparkLend launched on Gnosis Chain in September 2023, marking the protocol’s first expansion beyond Ethereum.
Spark began the wind-down process in early 2026, freezing new deposits and borrows on the Gnosis instance to limit further capital exposure. The protocol also raised the reserve factor to 50% across all assets on the Gnosis deployment, a move designed to accelerate the drawdown of outstanding positions by making the cost of staying in the market progressively less attractive.
The assets affected span the full range of what was available on the Gnosis instance: WXDAI, sDAI, WETH, wstETH, EURe, USDT, USDC.e, GNO, and USDC.
The mechanics of the shutdown
SparkLend operates under Sky governance as a permissionless, non-custodial money-market protocol, meaning protocol-level decisions like this one require a governance spell to execute on-chain. Once that spell goes live, the liquidation flag flips and undercollateralized or post-deadline positions become fair game for liquidators.
Existing positions technically remain active until September 14. DeFi liquidations are automated and indifferent to personal circumstances. A position that looks fine at the current collateral ratio could still become liquidatable if market conditions shift before a borrower gets around to closing it.
The practical advice from Spark is straightforward: repay loans now, withdraw collateral, and exit the Gnosis deployment entirely before the governance spell executes.
Liquidation penalties reduce the net value a borrower recovers from their collateral. Users who wait until the final days risk compounding that loss with any adverse price movement in their collateral assets.
Why Gnosis specifically
The core reason for the shutdown is utilization, or more precisely the lack of it. Gnosis Chain was never able to generate the kind of lending volume that would make the deployment economically self-sustaining for Spark. Low usage translates directly to low interest revenue, which in turn means the operational overhead of maintaining a separate deployment, managing risk parameters, and monitoring positions produces a negative return on resources.
Spark has been explicit about this calculus. The Gnosis deployment contributed negligible revenue relative to its Ethereum counterpart, and the risk of maintaining exposure to a low-liquidity environment without commensurate reward was the deciding factor.
The decision also fits a pattern Spark established earlier in 2026, when the protocol took similar risk-reduction steps against certain Ethereum-based assets that were not performing at acceptable efficiency thresholds.
Spark left the door open to returning if market conditions on Gnosis improve materially.