PayPal has entered into a strategic collaboration with Spark, an on-chain asset allocator introduced by Sky, previously known as MakerDAO, with the objective of expanding liquidity for PayPal USD (PYUSD), its dollar-backed stablecoin. The partnership marks a significant step in strengthening the stablecoin’s role in decentralized finance and enabling its wider adoption across financial markets.
According to details released by the companies, the integration of PYUSD into SparkLend has already resulted in deposits exceeding $100 million. Industry projections suggested that this figure could grow to as much as $1 billion in the near future, reflecting rising confidence in the stablecoin’s utility within decentralized markets.
Liquidity as a foundation for stablecoin growth
Executives associated with the initiative emphasized that deep and predictable access to liquidity remained central to the rapid scaling of stablecoins. Spark has argued that its market framework highlights how decentralized finance can offer the stability and infrastructure that global corporations require to integrate stablecoins into mainstream financial systems.
Spark outlined that its model for stablecoin expansion was built around a structured bootstrapping approach. Tokens listed on SparkLend undergo comprehensive risk assessments before being permitted into institutional-level supply and borrowing markets. Once qualified, Spark leverages capital from its more than $8 billion in stablecoin reserves to strengthen liquidity through the Spark Liquidity Layer. This process allows for more efficient allocation of capital and ensures that borrowing rates are kept supportive during early adoption phases, stimulating demand while encouraging long-term growth.
Industry backdrop and adoption momentum
The collaboration is being launched during a period of renewed momentum in the stablecoin sector. In the past three months, overall stablecoin supply has risen from $235 billion to $263 billion, while daily transaction volumes frequently surpass $100 billion. This surge in activity underscores the growing role of stablecoins as a backbone for both retail and institutional digital transactions.
Spark joins forces with @PayPal to grow PYUSD supply by $1 billion within the coming weeks.
Having already reached 200m deposits, this milestone reflects both the demand for PYUSD and the effectiveness of Spark’s stablecoin bootstrapping framework. pic.twitter.com/kNri70hRGv
— Spark (@sparkdotfi) September 25, 2025
Spark has highlighted its ability to manage liquidity at scale, referencing its successful deployment of $630 million in on-chain Bitcoin-backed loans to Coinbase. With the total value locked in decentralized finance now nearing $150 billion, the company has positioned itself as a core builder of liquidity infrastructure, which it considers vital for fintech and stablecoin integration.
PayPal’s broader PYUSD expansion
Leaders at PayPal have expressed confidence that the partnership would help PYUSD penetrate new markets more quickly, while maintaining compliance standards and ensuring seamless interoperability within the DeFi ecosystem. The stablecoin, which is issued by Paxos Trust Company, is fully collateralized with U.S. dollar deposits and short-term Treasury securities. It is currently available on the Ethereum mainnet, with cross-chain expansion forming part of its future development roadmap.
As part of its broader adoption strategy, PYUSD was also recently launched on the Stellar network. This development expands the stablecoin’s presence into additional wallets, platforms, and business applications, enhancing its utility for global payment scenarios. The announcement was made at the Stellar Meridian conference in Copacabana, Rio de Janeiro, on September 18, an event that brought together blockchain innovators, investors, and policymakers to discuss the future of decentralized finance.
Toward a deeper role in DeFi
The PayPal–Spark collaboration represents an effort to position PYUSD as a cornerstone asset within DeFi while strengthening its liquidity base. By combining PayPal’s fintech reach with Spark’s capital deployment framework, the initiative aims to accelerate the stablecoin’s adoption, bringing it closer to mainstream integration across global financial markets.
