James Richardson
Spark Protocol, a subsidiary of Sky (formerly MakerDAO), announced its integration of Ethena’s USDe synthetic dollar into its liquidity infrastructure on Tuesday. The partnership will see Spark allocate up to $1.1 billion from its balance sheet to Ethena’s yield-generating tokens, aiming to improve capital efficiency and revenue streams.
The Spark Liquidity Layer adds support for @ethena_labs’s USDe and sUSDe.
Up to $1.1 billion will be allocated to provide the best risk-adjusted yield for Savings USDS holders. pic.twitter.com/Ug2tjIkKK3
— Spark (@sparkdotfi) January 14, 2025
Launched in early 2024, USDe stands out by maintaining its dollar peg via an algorithmic basis trade rather than backing by corporate assets like Tether. This structure allows users to earn interest on holdings, contributing to its rise as the fourth-largest stablecoin in the market.
Before this integration, Spark’s Liquidity Layer relied primarily on Circle’s USDC and Sky’s proprietary USDS and sUSDS tokens. The Spark team projects potential annual returns of up to 27% APY during favorable conditions by onboarding Ethena’s USDe and sUSDe tokens.
“The integration represents a commitment to innovation and scalability,” Spark emphasized in a blog post. “This move strengthens liquidity management and enhances revenue generation, reinforcing Spark’s role as the leading yield engine for decentralized finance (DeFi).”
Expanding Yield Opportunities
This marks Spark’s initial step toward broader protocol allocations under its multi-chain Spark Liquidity Layer, which launched last year. The system simplifies access to Sky’s yield-focused Savings USDS (sUSDS) stablecoin across multiple DeFi protocols. Currently managing $6.2 billion in stablecoin liquidity, the platform allows users to convert USDC into Sky’s USDS or sUSDS for yield opportunities, supported by over-collateralized DeFi loans and other revenue streams.
With USDS now ranked as the third-largest stablecoin by market cap, Spark seeks to maximize depositor returns while adapting to Ethena’s market expansion.
Risk and Market Adjustments
Since March, Spark has leveraged Ethena’s assets through over-collateralized Morpho vaults. In light of Ethena’s rapid growth and increased USDe supply, Spark proposed capping exposure to 20% of total supply—equivalent to around $1.05 billion in USDS.
Ethena’s ecosystem contributions have reportedly generated $120 million in annual revenue for Sky. Additionally, Ethena entered its USDtb stablecoin, backed by U.S. government bonds via BlackRock’s BUIDL fund, into Spark’s $1 billion Tokenization Grand Prix aimed at integrating real-world assets into DeFi systems.
Driving Innovation Through the Endgame Plan
Spark was established following MakerDAO founder Rune Christensen’s “endgame” strategy to foster ecosystem growth through semi-autonomous subDAOs operating like startups. Since its inception, Spark’s money market has generated approximately $232 million in annual revenue, driving further expansion within the DeFi landscape.
