PayPal and Spark partner to supercharge PYUSD with $1B liquidity

Payments giant PayPal has partnered with decentralised finance (DeFi) platform Spark to inject $1 billion in liquidity into PYUSD, its dollar-backed stablecoin.

The partnership signals PayPal’s determination to make PYUSD a contender in the fast-growing stablecoin market, long dominated by Tether’s USDT and Circle’s USDC.

Building liquidity at scale

Liquidity has always been the lifeblood of stablecoins, and PayPal is turning to Spark’s capital reserves to give PYUSD the market depth it needs.

Spark will deploy $8 billion from its Liquidity Layer into PYUSD pools, creating immediate and predictable liquidity across DeFi markets.

According to Spark co-founder Sam MacPherson, the model offers a cheaper and more sustainable alternative to traditional market makers, who often demand double-digit incentives to provide depth.

This structure is already proving effective. Since PYUSD was added to SparkLend, Spark’s lending platform, deposits have surged past $100 million in just weeks.

Spark is now swapping tens of millions of USDC for PYUSD every day, helping the stablecoin circulate across trading venues and DeFi protocols.

The goal is to reach $1 billion in liquidity within weeks, a milestone that would instantly transform PYUSD’s role in the digital economy.

PayPal’s DeFi play

For PayPal, the partnership is about more than liquidity. It is about positioning PYUSD as a cornerstone of DeFi adoption at a time when decentralised markets are maturing rapidly.

David Weber, Head of PYUSD Ecosystem at PayPal, said platforms like Spark are critical in accelerating growth while ensuring full compliance and composability from the start.

With total DeFi value locked now approaching $150 billion, PayPal is betting that deep and predictable liquidity will push PYUSD into new markets faster.

The company also sees Spark’s framework as a reliable pathway to mainstream adoption.

By using blue-chip collateral to back its lending and liquidity programs, Spark provides the kind of safety net that large fintech firms like PayPal demand.

MacPherson, who also heads Phoenix Labs, a core contributor to Spark, underscored that predictable depth is the key to scaling stablecoins into everyday use.

PayPal seeks to ride the stablecoin momentum

The timing of this partnership is perfect. The global stablecoin market has been expanding at breakneck speed, with supply jumping by $30 billion in the past three months to a record $295 billion.

Daily transaction volumes are regularly touching $100 billion, underscoring stablecoins’ central role in on-chain finance.

PayPal’s push to lift PYUSD into this competitive arena reflects both confidence and urgency.

Spark has a proven track record of handling large-scale deployments. The platform previously managed $630 million in on-chain Bitcoin-backed loans for Coinbase, demonstrating its ability to handle the demands of major financial players.

That experience makes Spark uniquely positioned to support PYUSD as PayPal takes aim at the stablecoin market’s incumbents.

However, the collaboration between PayPal and Spark is not only about one stablecoin. It also offers a blueprint for how traditional finance and DeFi can work together to build liquidity at scale.

By combining PayPal’s reach and compliance-first approach with Spark’s deep reserves and decentralised infrastructure, the partnership showcases a model that other fintechs may soon follow.

If successful, PYUSD will stand as more than PayPal’s stablecoin. It could become the first example of a regulated, globally recognised fintech brand leveraging DeFi liquidity to achieve scale, potentially reshaping the dynamics of stablecoin competition.

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