PayPal and Spark Collaborate on DeFi Blueprint to Expand PYUSD Liquidity

PayPal has joined forces with the decentralized finance (DeFi) platform

to boost liquidity for its dollar-pegged stablecoin, USD (PYUSD), with the goal of increasing on-chain deposits from $100 million to $1 billion in just a few weeks title1 [ 1 ]. This partnership taps into Spark’s $8 billion stablecoin reserve pool to deliver reliable liquidity, sidestepping the traditional market-maker incentives that often come with high double-digit costs title2 [ 2 ]. By adding PYUSD to SparkLend, Spark’s lending platform, users are now able to lend and borrow PYUSD, and daily swaps involving tens of millions of for PYUSD are already taking place title3 [ 3 ]. This effort fits into PayPal’s larger vision to make PYUSD a foundational asset for DeFi, using Spark’s technology to speed up adoption while ensuring compliance and interoperability title4 [ 4 ].

This alliance comes as stablecoin usage surges, with worldwide supply growing by $30 billion in three months to reach $263 billion, and daily transactions topping $100 billion title5 [ 5 ]. Spark’s approach, which emphasizes stable borrowing rates and institutional-grade capital management, presents a more sustainable option compared to volatile liquidity incentives title6 [ 6 ]. Sam MacPherson, CEO of Phoenix Labs (a Spark contributor), highlighted that consistent liquidity is essential for scaling stablecoins like PYUSD, describing it as a “template for how fintech companies can leverage DeFi to drive adoption” title7 [ 7 ]. This strategy has already shown results: PYUSD deposits exceeded $100 million within weeks of being added to SparkLend title8 [ 8 ].

PayPal’s latest initiative signals its trust in the growing maturity of DeFi, with total value locked (TVL) in DeFi approaching $150 billion title9 [ 9 ]. David Weber, who leads the PYUSD Ecosystem at PayPal, remarked that platforms like Spark are crucial for establishing PYUSD as a “key DeFi asset with significant liquidity” title10 [ 10 ]. The partnership also highlights PayPal’s strong focus on compliance, as PYUSD is fully backed by U.S. dollar reserves and short-term Treasuries. Spark’s previous experience managing $630 million in on-chain Bitcoin-backed loans for Coinbase further demonstrates its ability to support substantial liquidity needs.

The timing of this collaboration aligns with broader trends in the market. Stablecoins have become central to on-chain finance, with Ethereum alone processing over $3 trillion in stablecoin transactions during the first quarter of 2025. Experts predict that stablecoin supply could exceed $1 trillion in 2025, fueled by increasing institutional participation and real-world applications such as cross-border payments and tokenized assets. For PayPal, working with Spark is a strategic move to challenge leading stablecoins like Tether’s

and Circle’s USDC, while embedding itself deeper into decentralized finance ecosystems.

This project also illustrates the changing relationship between traditional finance and DeFi. By combining PayPal’s global presence with Spark’s robust liquidity, the partnership offers a scalable blueprint for fintech companies to bring stablecoins into decentralized markets. If successful, PYUSD could set a new standard for regulated fintech brands utilizing DeFi infrastructure, potentially transforming stablecoin competition and speeding up mainstream acceptance.