TLDR
- PayPal USD has surpassed $135 million in deposits on SparkLend since its launch.
- SparkLend has over $8 billion in stablecoin reserves, supporting PYUSD’s liquidity.
- PayPal selected Spark for its ability to deploy capital across DeFi protocols.
- The stablecoin market is nearing $300 billion with rising demand for yield-bearing tokens.
PayPal USD (PYUSD) is gaining adoption in decentralized finance as DeFi protocol Spark has officially integrated the stablecoin into its lending platform. The move comes after over $135 million in PYUSD deposits were recorded on SparkLend, as the stablecoin’s utility expands beyond centralized platforms into decentralized markets.
PYUSD Added to SparkLend Following Risk Approval
Spark, a non-custodial stablecoin lending protocol, has added PayPal USD (PYUSD) to its SparkLend platform. The decision followed a completed risk assessment process, which PYUSD passed before becoming available to depositors.
SparkLend, which focuses on stablecoin-based lending, is part of the Spark Liquidity Layer. The liquidity layer supports over $8 billion in reserves and operates under Sky, the successor to MakerDAO. Users can deposit PYUSD into Spark Savings and receive yield-bearing tokens that maintain a fixed balance while increasing in value over time. These yields are governed by Sky and funded through protocol-generated revenue.
Sam MacPherson, CEO of Phoenix Labs, a core contributor to Spark, said PayPal selected Spark because it “is the only at-scale DeFi protocol that can actively deploy capital into other protocols.” This makes Spark a useful tool for large-scale stablecoin deployments seeking active returns across the decentralized ecosystem.
PayPal USD Records Over $135 Million in Deposits
Since its listing on SparkLend in August, PYUSD has surpassed $135 million in total deposits. The addition aligns with Spark’s goal to expand stablecoin-based lending and meet the growing demand for on-chain liquidity solutions.
PYUSD, issued by Paxos and backed 1:1 with US dollars, aims to provide seamless value transfer within and beyond PayPal’s ecosystem. Its entrance into DeFi through Spark adds a new use case for the stablecoin, allowing holders to earn yield without leaving the decentralized environment.
Data from DeFiLlama shows steady inflows into SparkLend following PYUSD’s integration. This suggests rising interest in newer stablecoins that offer both liquidity and income generation. Spark’s model enables capital to move efficiently while staying decentralized and non-custodial.
Stablecoin Market Approaches $300 Billion
The total stablecoin market capitalization is nearing $300 billion, according to DeFiLlama data. Since January, the sector has added over $90 billion, supported by regulatory clarity and higher interest in stablecoins that generate yield.
Recent legal frameworks such as Europe’s MiCA regulation and the U.S. Genius Act have helped push institutional and retail adoption. The growing stablecoin supply includes newer tokens like Ethena’s USDe and Sky’s USDS, which offer income features. USDe supply has grown 70% while USDS has increased by 23% since July.
The trend toward stablecoin lending and saving has brought increased capital into DeFi protocols. As more users seek low-volatility digital assets with yield, lending platforms like Spark have seen growth in total value locked.
DeFi Lending Market Sees Institutional Demand
DeFi lending platforms have grown over 70% year to date, according to a Binance Research report. This growth is driven by more institutions entering decentralized markets through stablecoin-based strategies.
With yield-bearing stablecoins gaining momentum, Spark is positioned to serve both retail and institutional users. Its ability to deploy deposited capital into other protocols offers an advantage in yield optimization. This approach differs from other platforms that limit deposited assets to internal pools.
Coinbase recently revived its Stablecoin Bootstrap Fund to support liquidity for USDC across multiple DeFi platforms. Although the fund’s size remains undisclosed, it adds to the broader movement toward on-chain lending solutions.
As DeFi continues to evolve, integrations like PYUSD into Spark show how stablecoins are being positioned as tools for both liquidity and income generation across decentralized financial infrastructure.
