Spark is deploying $100 million in Superstate’s cryptocurrency carry fund to secure underlying trading yields as returns on traditional Treasury holdings begin to slow across the market.
summation
- Spark allocated $100 million from its stablecoin reserves to Superstate’s Crypto Carry Fund.
- The move comes as U.S. Treasury yields fell to their lowest in six months.
- USCC claims to offer a 30-day return of 9.26% through cryptocurrency-based trading.
According to an announcement on October 23, Spark, a DeFi lending protocol, allocated $100 million of its reserves to the Superstate Crypto Carry Fund (USCC). USCC generates revenue through a market-neutral arbitrage strategy by leveraging the price difference, or “basis,” between cryptocurrency assets such as Bitcoin (BTC) and Ethereum (ETH) and CME’s futures contracts.
The move deploys a portion of the protocol’s $9 billion USDS stablecoin holdings to secure a yield that currently stands at 9.26%. That’s a significant premium for compressing U.S. Treasury returns.
As Treasury yields fall, Spark switches to a cryptocurrency base.
Spark’s $100 million allocation to Superstate’s Crypto Carry Fund highlights the protocol’s increasing focus on managing various reserves. U.S. Treasury yields, which have been the cornerstone of the cryptocurrency yield economy for the past two years, recently hit their lowest level in six months.
For DeFi protocols like Spark and major stablecoin issuers that have relied heavily on tokenized T-Bills, this compression poses a direct threat to their ability to deliver competitive returns.
The 9.26% 30-day yield that USCC claims to offer offers a powerful alternative at a time when traditional methods are limited, potentially allowing Spark to maintain the appeal of the sUSDS savings rate currently funded by protocol revenues.
Spark in particular has recently shown a pattern of large investments to strengthen its position as a key component of the Sky ecosystem. Earlier this year, the protocol announced the distribution of $1.1 billion in Ethena’s USDe and sUSDe tokens, $25 million participation in the Maple Finance lending pool, and the launch of a $1 billion Tokenization Grand Prix to drive adoption of tokenized assets.