PayPal Launches PYUSD Savings Vault on Spark With 4.25% APY

• PYUSD Savings Vault launches on Spark with a 4.25% APY, aligned with other major stablecoin vaults.
• Vault allocates 90% of deposits to yield strategies via Spark Liquidity Layer, 10% for liquidity.
• PYUSD supply on Spark nears $150M as PayPal targets $1B in stablecoin deposits.

PayPal has launched a new yield product tied to its U.S. dollar stablecoin PYUSD, expanding its footprint in decentralized finance through a Savings Vault on lending protocol Spark. The move comes as PayPal and Spark continue efforts to increase PYUSD deposits toward a previously stated target of $1 billion.

The PYUSD Savings Vault is now available on Spark, a decentralized lending and liquidity protocol launched in 2024. The vault enables PYUSD holders to earn a yield on their stablecoin balances, with Spark currently offering a 4.25% annual percentage yield. That rate aligns with yields offered on Spark’s other stablecoin vaults, including those for USDC, USDT, and Spark’s native USDS token, which Sky, formerly known as MakerDAO issue.

According to Spark documentation, returns generated by the PYUSD Savings Vault are anchored to the Sky Savings Rate. That benchmark rate is funded by Sky Protocol’s revenue streams, which include stability fees from overcollateralized loans, investments in real-world assets, and liquidity provision activity conducted through Spark, Sky’s largest subDAO.

How the Vault Allocates Deposits

The PYUSD Savings Vault operates as part of Spark’s Savings V2 product line. Deposits are routed through the Spark Liquidity Layer, which deploys capital across Spark’s balance sheet using a mix of lending and investment strategies. Under the current structure, 90% of deposited funds are allocated into yield-generating strategies, while the remaining 10% is retained within the vault contract to support instant withdrawals.

Interest earned by depositors accrues through an accumulative token known as spPYUSD. Spark’s data shows that the vault’s underlying allocations currently consist of more than 57% stablecoins, 15.73% onchain crypto lending, 10.24% AAA-rated corporate debt, 10.10% over-the-counter crypto lending, and 5.32% U.S. Treasurys, with the balance spread across other strategies. Spark defines onchain crypto lending as overcollateralized loans backed by assets such as Bitcoin, Ethereum, and liquid staking tokens.

Context From Earlier PYUSD Integration

PYUSD was integrated into SparkLend, Spark’s Aave v3-based money market, in September. At that time, PayPal and Spark stated an objective of growing PYUSD deposits to $1 billion, following roughly one-fifth of that amount being deposited within the first 24 hours. Spark currently reports nearly $150 million in PYUSD supplied to the protocol, earning approximately 2.11%, with about $67 million borrowed.

Spark also reported that total value locked across its Savings V2 vaults has reached about $395 million since the product line launched in October.

PayPal introduced PYUSD in 2023 in partnership with Paxos. Following Paxos’ receipt of a federal banking charter from the Office of the Comptroller of the Currency, Paxos stated that PYUSD has become the largest U.S. dollar stablecoin issued under federal regulatory oversight, with a reported market capitalization of $3.8 billion.