RESOLVING THE LEDGER
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Fintechs, exchanges and banking groups are increasingly launching their own dollar-linked tokens. Each issuer wants to keep users, reserves and transaction activity inside its own network as competition ramps up.
The stablecoin landscape "is about to fragment more and more," Sam MacPherson, CEO of Phoenix Labs, said in an interview with CoinDesk.
PayPal has PYUSD, Circle has USDC, and Tether has USDT. Robinhood has joined the Global Dollar (USDG) consortium and is building its own chain, while OpenUSD (OUSD) is another large consortium that includes Stripe and Coinbase.
Beyond these giants, there are hundreds of other stablecoins, including Ethena's USDe, World Liberty Financial's USD1 and Sky's USDS.
The result is liquidity scattered across an expanding number of tokens and networks.
Spark is betting those networks will still need to connect. Its aim is to be the layer that moves money between them.
Spark is an affiliated lending and liquidity unit of Sky, the DeFi ecosystem formerly known as MakerDAO and the issuer of the USDS stablecoin. It is developed by Phoenix Labs and supported through Sky's governance and capital.
Its stablecoin FX layer, on Uniswap , is designed to help institutions switch between stablecoins by concentrating liquidity in yield-bearing pools.
Spark migrated about $150 million into Uniswap v4 pools pairing USDS against USDT and PYUSD. The system accounted for about 30% of stablecoin-to-stablecoin swap volume on Uniswap and routed roughly $1.5 billion in its first 30 days, MacPherson said.
The 30% figure covers only swaps between stablecoins, not all Uniswap trades involving a stablecoin.
The mechanism underneath is a Uniswap v4 hook called DualPool. It keeps liquidity-earning yield in Spark's vaults while idle and pulls it into the pool only when a swap needs it, settling it within a single block.
Spark has also struck infrastructure deals directly with issuers. PayPal teamed up with Spark last year to boost the liquidity of PYUSD as it competes with Tether's USDT and Circle's USDC.
MacPherson sees payments as the catalyst that turns fragmentation into volume. With the GENIUS Act coming into force next year and the Clarity Act potentially advancing, he projects onchain payments could reach $3 trillion by 2030.
"It's going to seem like nothing's happening," he said, "and then all of a sudden a lot is going to happen at once."
That strategy grew from Spark's decision late last year to shelve a consumer-facing app that would have placed it in direct competition with Coinbase, PayPal and Robinhood for distribution.
Consumer apps are "extremely hard to compete in," MacPherson said. While he had said in November that Spark's app was "paused, not canceled," he now said that it was "paused indefinitely."
Rather than build its own customer relationships, Spark started supplying yield and liquidity to apps consumers already use. MacPherson described the strategy as "doubling down on this more B2B [business-to-business] or B2B2C [business-to-business-to-consumer] model." Shelving the app, he said, was "definitely the correct decision."
Robinhood's Earn product shows how that replacement model works. Launched with an APY of roughly 7% on USDG deposits, it routes users' funds into a Morpho onchain vault curated by decentralized advisory firm Steakhouse Financial.
The vault allocates funds across lending markets involving Ethena's USDe, Maple's syrupUSDG and Spark's spUSDG. It has drawn more than $200 million in deposits in the last 24 days, according to onchain data.
The arrangement gives Spark exposure to retail deposits without requiring it to own the app or the customer relationship.
Spark is one of several protocols in the stack. Morpho provides the credit network, and Steakhouse curates the vault, but MacPherson pointed to it as evidence that the model is working.
"Robinhood is quite large, and so we expect this to grow to billions in size," he said.
Spark's backend strategy also extends to direct institutional lending.
It is unfolding during a difficult stretch for decentralized finance, with Spark's annual revenue falling from about $80 million during the bull market to roughly $20 million today, MacPherson said.
The firm’s Bitcoin-backed over-the-counter loans issued through Anchorage stand at about $260 million in outstanding balance, with roughly $400 million originated and a target of $1 billion by year-end.
The target would require outstanding balances to nearly quadruple in about six months, even as MacPherson acknowledged that market conditions had "lowered the demand a little bit."
Demand comes partly from borrowers such as bitcoin miners, who "need to fund operations at all times regardless of whether it's a bull or bear market," MacPherson said. The bottleneck, he added, is onboarding speed.
Spark Prime, a hybrid prime brokerage combining centralized and onchain financial services, holds about $20 million in outstanding loans and remains in a deliberate beta.
MacPherson said most major crypto funds are onboarding and that conversations with traditional finance firms are increasing, partly because venues like Hyperliquid have drawn institutional interest to crypto-native trading of equities and other assets.
The protocol is also pursuing credit ratings from S&P and Moody's alongside assessments from crypto-native agencies such as Credora. Such ratings could help institutional risk teams assess Spark before approving it as a counterparty.
MacPherson frames the bear market as manageable. "This has been one of the easier bear markets," he said. "The fundamentals, adoption, the regulatory clarity, it's all systems go on the institutional side."
Spark provides "the rails and the liquidity services," MacPherson said. Its bet is that fragmentation creates a valuable role for a neutral intermediary, one that becomes harder to justify if issuers keep their liquidity inside their own networks.
1 The future of crypto payments won't inc...
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