Spark Bets on Stablecoin Fragmentation as OTC Lending Targets $1B

Spark has shelved its consumer app indefinitely. The DeFi protocol, built by Phoenix Labs and backed by Sky (formerly MakerDAO), is now betting entirely on institutional liquidity and lending. CEO Sam MacPherson said the stablecoin market is heading toward a multi-issuer future, and Spark wants to be the neutral plumbing connecting those separate pools.

The list of companies launching or expanding their own digital dollars is long. PayPal's PYUSD, Circle's USDC, Tether's USDT, plus offerings from Robinhood, Stripe, Coinbase, Ethena, and World Liberty Financial are all live or in development. MacPherson expects fragmentation to accelerate as each issuer pursues its own distribution strategy. Spark's role, he said, is to provide the liquidity layer that lets these tokens move between each other efficiently.

Spark's infrastructure already supports PayPal's PYUSD liquidity. Robinhood's Earn product routes customer deposits into lending vaults that include Spark's yield-bearing assets. The protocol recently moved about $150 million into Uniswap v4 liquidity pools pairing its USDS token with USDT and PYUSD. According to MacPherson, Spark handled roughly 30% of stablecoin-to-stablecoin swap volume on Uniswap in its first month, processing about $1.5 billion in transactions. Its DualPool technology keeps assets earning yield until swaps are executed, a design meant to improve capital efficiency.

The institutional lending business is growing faster than the consumer side ever did. Spark's Bitcoin-backed over-the-counter lending portfolio has about $260 million in outstanding loans, with roughly $400 million originated so far. MacPherson is targeting $1 billion in outstanding loans by year-end, driven mostly by demand from Bitcoin miners and institutional borrowers.

The company is pursuing credit ratings from agencies including S&P, Moody's, and crypto-native evaluator Credora. Moody's, listed on the NYSE as MCO, carries an Alpha Score of 63 out of 100 on AlphaScala, with a Moderate label in the Financials sector. That score reflects the agency's established credit assessment business, though crypto-native ratings remain a nascent market.

Regulatory timing could help Spark's strategy. MacPherson expects the GENIUS Act – once implemented – and potential progress on the CLARITY Act to accelerate on-chain payments and institutional adoption. The Clarity Act has faced Senate delays. The direction of travel is toward clearer rules for stablecoin issuers and intermediaries.

Revenue fell from roughly $80 million to $20 million during the crypto bear market. The bet is that institutional lending, not consumer apps, will drive the next cycle. MacPherson said Spark aims to be a neutral liquidity provider in a fragmented stablecoin ecosystem, not a competitor to the platforms it serves.