PayPal has joined forces with decentralized finance (DeFi) platform Spark to significantly increase on-chain liquidity for its PayPal USD (PYUSD) stablecoin. The ambitious plan aims to scale current deposits from $100 million to $1 billion in the coming weeks.
PYUSD, a U.S. dollar-pegged stablecoin issued by Paxos, has been integrated into SparkLend, Spark's decentralized lending marketplace. This integration enables users to supply PYUSD as collateral and borrow against it, with liquidity backed by Spark's substantial $8 billion stablecoin reserve pool.
This DeFi-native strategy offers a distinct advantage over conventional liquidity programs that depend on costly market-maker incentives, providing predictable liquidity depth at fixed borrowing rates.
"Reliable access to deep liquidity is essential for stablecoins like PYUSD to achieve rapid scaling," stated Sam MacPherson, CEO of Phoenix Labs, a contributor to Spark. He described the collaboration as a model for how fintech companies can leverage DeFi infrastructure to accelerate the adoption of new stablecoins.
This partnership emerges during a period of strong momentum for stablecoins, with the global supply surging by nearly $30 billion over three months to reach $263 billion, and daily transaction volumes exceeding $100 billion.
Spark has a track record in large-scale on-chain lending, having previously facilitated $630 million in Bitcoin-backed loans to Coinbase.
"As the total value locked in DeFi nears $150 billion, platforms such as Spark are vital for establishing PYUSD as a foundational, deeply liquid asset within the DeFi ecosystem," commented David Weber, Head of the PYUSD Ecosystem at PayPal, in an official release.