{"id":16379,"date":"2025-09-25T18:35:59","date_gmt":"2025-09-25T16:35:59","guid":{"rendered":"https:\/\/wsj-crypto.com\/?p=16379"},"modified":"2025-09-25T18:35:59","modified_gmt":"2025-09-25T16:35:59","slug":"paypal-teams-up-with-spark-to-boost-pyusd-liquidity-in-the-defi-sphere","status":"publish","type":"post","link":"https:\/\/wsj-crypto.com\/index.php\/2025\/09\/25\/paypal-teams-up-with-spark-to-boost-pyusd-liquidity-in-the-defi-sphere\/","title":{"rendered":"PayPal Teams Up with Spark to Boost PYUSD Liquidity in the DeFi Sphere"},"content":{"rendered":"

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PayPal has collaborated with decentralized finance (DeFi) protocol Spark to enhance liquidity for its US dollar stablecoin, PayPal USD (PYUSD<\/a>).\u00a0<\/p>\n

Since its August launch<\/a> on SparkLend, a lending market centered on stablecoins, PayPal’s stablecoin has drawn over $135 million in deposits, according to a statement released on Thursday.<\/p>\n

Launch in 2023 from the MakerDAO ecosystem<\/a>, SparkLend was subsequently integrated into Sky, Maker\u2019s successor entity<\/a>. It operates the Spark Liquidity Layer, which is supported by over $8 billion in reserves of stablecoins, according to the protocol.<\/p>\n

Staked stablecoins on Sparklend protocol. Source: <\/em>DeFiLlama<\/em><\/a> <\/em><\/figcaption><\/figure>\n

Sam MacPherson, co-founder and CEO of Phoenix Labs, which is a primary contributor to Spark, informed Cointelegraph that PayPal selected Spark because it \u201cis the sole at-scale DeFi protocol capable of actively allocating capital into other protocols.\u201d He further commented:<\/p>\n

\u201cDeFi will serve as the framework for all finance in the future, making a focus on that very logical as there is enormous growth potential.\u201d<\/p><\/blockquote>\n

Spark presents a non-custodial lending protocol<\/a> where participants deposit stablecoins into Spark Savings and obtain non-rebasing yield tokens. As per Messari, these tokens hold a steady balance yet increase in value over time, with yields determined by Sky governance and financed through protocol revenues.<\/p>\n

PYUSD was incorporated into SparkLend after successfully passing the protocol\u2019s risk evaluations.\u00a0<\/p>\n

Related: <\/strong><\/em>Aave, Sky float partnership to bridge DeFi, TradFi<\/strong><\/em><\/a><\/p>\n

Stablecoin market approaches $300 billion <\/h2>\n

With Europe\u2019s Markets in Crypto-Assets Regulation<\/a> (MiCA) coming into effect in January and the US enacting stablecoin regulations via the Genius Act<\/a> in July, the stablecoin market has been experiencing a surge.<\/p>\n

DefiLlama<\/a> data indicates that the stablecoin market capitalization is nearing $300 billion, increasing by over $90 billion since the year’s beginning.<\/p>\n

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Total Stablecoins Market Cap. Source: DefiLlama <\/em><\/figcaption><\/figure>\n

The overall expansion of stablecoins has paralleled a rising demand for yield-bearing stablecoins<\/a>. Ethena\u2019s USDe and Sky\u2019s USDS have demonstrated significant momentum, with USDe\u2019s supply increasing by 70% and USDS by 23% since July 18, when the Genius Act was enacted<\/a>.<\/p>\n

In August, Coinbase reinstated its Stablecoin Bootstrap Fund<\/a> to infuse liquidity into USDC across DeFi platforms, including Aave and Morpho<\/a> \u2014 although the exchange did not reveal the fund’s size.<\/p>\n

A Binance Research report provided to Cointelegraph<\/a> in September noted that as stablecoin adoption increases, \u201cDeFi lending protocols are more frequently positioned to facilitate institutional engagement.\u201d<\/p>\n

The DeFi lending markets grew by over 70% year to date in September, with institutional interest identified as a crucial factor.<\/p>\n

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DeFi lending protocols, TVL, year-to-date chart. Source: Binance Research<\/em><\/figcaption><\/figure>\n

The trend toward yield-generating stablecoins has been labeled as \u201cstablecoin 2.0.\u201d<\/a> In contrast to \u201cfirst-generation\u201d tokens like Tether\u2019s USDt (USDT<\/a>) that primarily focused on digitizing the US dollar and placing it on-chain, a \u201csecond generation\u201d of stablecoins aims to create additional utility by producing yield concurrently with liquidity.<\/p>\n

Magazine: <\/strong><\/em>How Ethereum treasury companies could ignite \u2018DeFi Summer 2.0\u2019<\/strong><\/em><\/a><\/p>\n