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

Spark is positioning itself as key infrastructure for the rapidly expanding stablecoin market, shifting its focus from consumer products to institutional liquidity and lending services as competition among stablecoin issuers intensifies.

Developed by Phoenix Labs and backed by the Sky ecosystem, formerly MakerDAO, Spark has indefinitely paused its planned consumer app to prioritize a business-to-business (B2B) and business-to-business-to-consumer (B2B2C) strategy. Instead of competing with platforms like Robinhood, Coinbase, and PayPal, Spark now provides yield and liquidity infrastructure that powers their products.

CEO Sam MacPherson believes the stablecoin market will become increasingly fragmented as major players including PayPal (PYUSD), Circle (USDC), Tether (USDT), Robinhood, Stripe, Coinbase, Ethena, and World Liberty Financial launch or expand their own digital dollar offerings. Spark aims to serve as the liquidity layer connecting these separate ecosystems.

The protocol recently migrated around $150 million into Uniswap v4 liquidity pools pairing USDS with USDT and PYUSD. According to MacPherson, the platform handled roughly 30% of stablecoin-to-stablecoin swap volume on Uniswap and processed approximately $1.5 billion in transactions during its first month. Its DualPool technology keeps assets earning yield until swaps are executed, improving capital efficiency.

Spark is also expanding institutional partnerships. Its infrastructure already supports PayPal's PYUSD liquidity, while Robinhood's Earn product routes customer deposits into lending vaults that include Spark's yield-bearing assets. MacPherson expects similar partnerships to continue growing as on-chain payments accelerate, especially with the upcoming implementation of the GENIUS Act and potential progress on the Clarity Act.

Despite a crypto bear market reducing annual revenue from approximately $80 million to $20 million, Spark's institutional lending business is expanding rapidly. The company's Bitcoin-backed over-the-counter lending portfolio currently has about $260 million in outstanding loans, with roughly $400 million originated. Spark is targeting $1 billion in outstanding loans by the end of the year, driven largely by demand from Bitcoin miners and institutional borrowers.

The company is also pursuing credit ratings from agencies including S&P, Moody's, and crypto-native evaluator Credora to strengthen institutional credibility. MacPherson remains optimistic that improving regulation and growing institutional adoption will fuel long-term growth, positioning Spark as a neutral liquidity provider in an increasingly fragmented stablecoin ecosystem.