PayPal is partnering with the Decentralized Finance (DEFI) protocol Spark to expand the liquidity of US dollar Stablecoin, PayPal USD (PYUSD).
Paypal’s Stablecoin has collected more than $135 million in deposits since its listing on Sparklend, focused on Sparklend in August, according to a statement on Thursday.
Sparklend was launched by the Makerdao Ecosystem in 2023 and later merged with Maker’s successor Sky. According to the protocol, it runs Spark Ryulidity Layer.
Sam Macpherson, co-founder and CEO of Phoenix Labs, Spark’s core contributor, told Cointelegraph that PayPal chose Spark because it was “the only scale Defi protocol that can actively deploy capital to other protocols.” He added:
“Defi will be the rail for all financials in the future, so focusing on that makes a lot of sense as it has the potential for great growth.”
Spark is a non-base lending protocol in which users deposit Stablecoins to Spark savings and receive non-rehial tokens for rebating. According to Messari, these tokens maintain a fixed balance, but their value increases over time, are set up by Sky Governance and funded through protocol revenue.
PYUSD was added to SparkLend after passing the protocol’s risk assessment.
Related: Aave, Sky Float Partnership to Bridge Defi, Tradfi
Stablecoin Market is close to $300 billion
The Stablecoin market has skyrocketed as European markets came into effect in January to the Crypto Deduction Regulation (MICA) and in July it was enacted regularly in the US with the Genius Act.
Defillama data shows that Stablecoin’s market capitalization is approaching $300 billion, exceeding $90 billion since the start of the year.
The growth of overall stability is consistent with an increase in demand for settlements that bear the yield. Ethena’s USDE and Sky’s USD have found strong momentum, with USDE supply rising 70%, and USDS has risen 23% since the Genius Act was signed into law on July 18th.
In August, Coinbase revived the Stablecoin Bootstrap Fund, injecting liquidity into USDC across its Defi platform, including Aave and Morpho, but the exchange did not disclose the size of the fund.
A Binance research report, shared with the Cointelegraph in September, said as Stablecoin adoption accelerates, it is “increasingly positioned to promote institutional participation.”
The Defi Lending market grew by more than 70% in September by 2019, with institutional demand cited as the main driver.
The shift to stablecoins that produce harvests is described as “Stablecoin 2.0.” While “first generation” tokens like Tether’s USDT (USDT) focused on digitizing the US dollar and on-chain installation, “second generation” Stablecoins are trying to create new utilities by generating yields along with liquidity.
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