PayPal taps DeFi’s Spark to inject $1B into PYUSD stablecoin

Investing.com--PayPal announced Thursday it has partnered with on-chain capital allocator Spark to grow the liquidity of its stablecoin, PYUSD, to $1 billion within a matter of weeks, according to Spark’s co-founder Sam MacPherson. The collaboration has already propelled deposits to nearly $200 million, demonstrating a new model for bootstrapping digital assets.

The Liquidity Advantage

“Predictable access to deep liquidity is what allows stablecoins like PYUSD to scale quickly,” MacPherson said in a statement Wednesday. But achieving that liquidity has traditionally required costly third-party market makers, with costs in the “low double digits,” he noted.

Spark’s model offers a sustainable alternative by leveraging its access to deep capital reserves. “We’re able to provide cheap capital that’s below the rates of market makers by a significant amount... on the order of 7% or 8%,” MacPherson said in an interview with Investing.com. He emphasized that this cost efficiency is precisely “why this is a very good program for PayPal.”

PayPal’s DeFi Ambition

This deep liquidity is key to PayPal’s strategy. “With total DeFi value approaching $150 billion, platforms like Spark are crucial to advancing PYUSD as a cornerstone for DeFi,” said David Weber, Head of PYUSD Ecosystem at PayPal, in a statement. “By working together, PYUSD can reach new markets faster while maintaining full compliance and composability from day one.”

The Bootstrapping Blueprint

Spark’s “bootstrapping blueprint” provides a structured path. After a risk assessment, PYUSD was listed on Spark’s lending market, SparkLend. Spark’s Liquidity Layer then began deploying capital from its $8 billion+ reserves, creating immediate depth. The process is already operating at scale: MacPherson told Investing.com that Spark is swapping “tens of millions of USDC for PYUSD every day.” The system is backed by blue-chip collateral, ensuring safety for participants.

Market Growth and Regulatory Tailwinds

The partnership arrives as stablecoins cement their role as the backbone of onchain finance, with their total supply surging from $235 billion to $263 billion in just three months. This growth is supported by a shifting crypto regulatory landscape. “It’s a world of difference... This is all we ever wanted, rules of the road,” MacPherson said, noting that clearer regulations are why “you see a lot of traditional fintech getting involved.”

Spark has already proven its ability to handle fintech-scale demands, having previously deployed $630 million in on-chain Bitcoin-backed loans to Coinbase. This track record underscores its unique position. “Spark, at the size that we’re at, is pretty uniquely positioned... There’s really nobody else in the space that is at our size and able to operate to provide this,” MacPherson said.

A Template for the Industry

Building on that proven track record, and with PYUSD now live on Ethereum, the collaboration marks a significant step in bridging traditional finance with decentralized infrastructure, offering a new template for the industry.