Spark, the DeFi lending protocol developed by Phoenix Labs and affiliated with Sky (formerly MakerDAO), has abandoned its own consumer-facing app in favor of a quieter role: supplying yield and liquidity infrastructure to platforms that already have the users. The shift comes as the protocol's revenue has fallen from roughly $80 million during the last bull market to about $20 million today, a decline Phoenix Labs CEO Sam MacPherson described as part of "one of the easier bear markets" the industry has faced.
Rather than compete directly for retail depositors, Spark is positioning itself as what MacPherson called "the rails and the liquidity services" behind consumer brands. The clearest example is Robinhood's Earn product, which has pulled in $200 million in deposits in just 24 days by offering roughly 7% APY on USDG, a stablecoin tied to the USDG consortium that counts Robinhood among its members. Spark supplies the yield infrastructure behind that offering rather than marketing it under its own name.
OTC Lending Becomes the Fastest-Growing Line
Bitcoin-backed over-the-counter lending has emerged as Spark's fastest-growing business, with roughly $400 million in loans originated and $260 million currently outstanding, facilitated in part through Anchorage. MacPherson said the team expects the OTC book to "grow to billions in size" and is targeting $1 billion in outstanding loans by the end of the year. Separately, Spark Prime, the protocol's onchain lending product, carries about $20 million in outstanding loans.
On the trading side, Spark has moved roughly $150 million into USDS pools on Uniswap v4, a migration that now accounts for about 30% of all stablecoin-to-stablecoin swap volume on Uniswap. Combined routing through Spark's infrastructure has reached approximately $1.5 billion over the trailing 30 days, according to figures cited in the report.
A Crowded Field of Stablecoin Issuers
Spark's pivot to backend infrastructure comes as the stablecoin landscape grows more fragmented, with issuers including Circle's USDC, Tether's USDT, PayPal's PYUSD, Ethena's USDe, and the Stripe- and Coinbase-backed OpenUSD all competing for share. MacPherson said he expects the market "is about to fragment more and more" as more consortiums and corporate issuers enter the space, which analysts project could handle as much as $3 trillion in onchain payments by 2030.
Vault curation for Spark's products is handled in part by Steakhouse Financial, while Morpho provides underlying credit-network infrastructure. MacPherson framed the decision to walk away from the consumer app as "definitely the correct decision," betting that supplying yield to platforms with existing distribution — rather than building a competing brand from scratch — is the more durable path through a slower market.
