Spark is deploying $100 million into Superstate’s crypto carry fund to capture basis trade yields as returns from its traditional Treasury holdings begin to soften across the market.
Summary
- Spark allocated $100 million from its stablecoin reserves to Superstate’s Crypto Carry Fund.
- The move comes as U.S. Treasury yields fall to six-month lows.
- USCC claims to offer a 9.26% 30-day yield through crypto basis trading.
According to an announcement on Oct. 23, the DeFi lending protocol Spark has allocated $100 million from its reserves to the Superstate Crypto Carry Fund, or USCC. USCC generates returns through a market-neutral arbitrage strategy, capitalizing on the price difference, or “basis,” between crypto assets like Bitcoin (BTC) and Ethereum (ETH) and their futures contracts on the CME.
The move positions a portion of the protocol’s $9 billion USDS stablecoin reserve to capture a yield that currently clocks in at 9.26%, a significant premium to compressing U.S. Treasury returns.
Spark turns to crypto basis as Treasury yields falter
Spark’s $100 million allocation to Superstate’s Crypto Carry Fund underscores the protocol’s growing focus on diversified reserve management. Yields on U.S. Treasury bonds, a cornerstone of the crypto yield economy for the past two years, have recently hit six-month lows.
For DeFi protocols like Spark and major stablecoin issuers who have relied heavily on tokenized T-Bills, this compression poses a direct threat to their ability to offer competitive returns.
The 9.26% 30-day yield USCC claims to offer presents a compelling alternative at a time when traditional avenues are constricting, allowing Spark to potentially maintain the attractiveness of the sUSDS savings rate, which is currently funded by protocol revenue.
Notably, Spark has recently demonstrated a pattern of large-scale investments to bolster its position as a core component of the Sky ecosystem. Earlier this year, the protocol announced a $1.1 billion deployment to Ethena’s USDe and sUSDe tokens, a $25 million participation in Maple Finance lending pools, and the launch of a $1 billion Tokenization Grand Prix aimed at advancing tokenized asset adoption.
