PayPal is launching the PYUSD Savings Vault on decentralized lending platform Spark, introducing a new way for its stablecoin users to earn yield on their holdings.
The Spark website advertises a 4.25% APY for the vault — equivalent to the returns expected on other stablecoin vaults for the largest centralized stablecoins USDC and USDT, as well as Spark’s native USDS token, which is issued by parent organization Sky (formerly MakerDAO).
Yield for the PYUSD Savings Vault is “anchored” to the Sky Savings Rate, which is funded by Sky Protocol’s revenue, according to Spark’s documentation. Sky earns revenue on stability fees from overcollateralized loans, investments in real-world assets, and via liquidity provisioning in its first and largest subDAO, Spark.
Spark, launched in 2024, is a DeFi lending and liquidity protocol that offers a range of yield-generating stablecoin Savings vaults and the SparkLend decentralized money market, an Aave v3 fork that allows users to take out overcollateralized stablecoin loans by depositing crypto.
PYUSD was integrated into SparkLend in September, enabling users to supply and borrow the stablecoin. PayPal and Spark said at the time they wanted to grow deposits to $1 billion, after seeing about a fifth of that amount deposited within the first 24 hours.
There is currently nearly $150 million PYUSD supplied, earning about 2.11%, and about $67 million borrowed, according to Spark’s figures.
Growing the PYUSD pie
The new PYUSD Savings Vault could help grow PYUSD deposits on SparkLend. As part of Spark’s Savings V2 product line, the vault also utilizes the Spark Liquidity Layer that deploys stablecoin deposits across Spark’s balance sheet, including lending strategies on SparkLend.
Spark noted that the total value locked in Savings V2 vaults has grown to about $395 million since launching in October. The Spark Liquidity Layer leverages “the Sky Savings Rate as a base and can deploy into additional accepted strategies to optimize yield above this minimum,” offering variable vault rates.
For the PYUSD Savings Vault, 90% of deposits will be allocated through the Spark Liquidity Layer into yield-generating strategies with the remaining 10% parked in the contract as “liquidity for instant withdrawals,” according to the documentation. Interest accrues to the spPYUSD “accumulative token” issued to depositors.
According to the vault’s current composition, over 57% is still held in stablecoins, while 15.73% is directed toward onchain crypto lending, 10.24% toward AAA corporate debt, 10.10% toward OTC crypto lending, 5.32% toward Treasurys, and the remainder in other investment strategies. Onchain crypto lending is defined as “over-collateralized lending against blue-chip crypto-native assets such as BTC, ETH and LSTs/LRTs,” according to the site.
PayPal launched PYUSD in 2023 through a partnership with Paxos. With Paxos receiving a federal banking charter from the Office of the Comptroller of the Currency on Friday, Paxos said “PYUSD is now officially the largest dollar stablecoin issued under federal regulatory oversight,” with a market capitalization of $3.8 billion.
© 2025 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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