The stablecoin market is fragmenting, and onchain capital allocator Spark is betting it can capitalize on the split.
Fintechs, exchanges and banking groups are increasingly launching their own dollar-linked tokens. Each issuer wants to keep users, reserves and transaction activity inside its own network as competition ramps up.
The stablecoin landscape “is about to fragment more and more,” Sam MacPherson, CEO of Phoenix Labs, said in an interview with CoinDesk.
PayPal has $PYUSD, Circle has $USDC, and Tether has $USDT. Robinhood has joined the Global Dollar (USDG) consortium and is building its own chain, while OpenUSD (OUSD) is another large consortium that includes Stripe and Coinbase.
Beyond these giants, there are hundreds of other stablecoins, including Ethena’s USDe, World Liberty Financial’s USD1 and Sky’s USDS.
The result is liquidity scattered across an expanding number of tokens and networks.
Spark is betting those networks will still need to connect. Its aim is to be the layer that moves money between them.
Spark is an affiliated lending and liquidity unit of Sky, the DeFi ecosystem formerly known as MakerDAO and the issuer of the USDS stablecoin. It is developed by Phoenix Labs and supported through Sky’s governance and capital.
Its stablecoin FX layer, on Uniswap, is designed to help institutions switch between stablecoins by concentrating liquidity in yield-bearing pools.
Spark migrated about $150 million into Uniswap v4 pools pairing USDS against $USDT and $PYUSD. The system accounted for about 30% of stablecoin-to-stablecoin swap volume on Uniswap and routed roughly $1.5 billion in its first 30 days, MacPherson said.
The 30% figure covers only swaps between stablecoins, not all Uniswap trades involving a stablecoin.
The mechanism underneath is a Uniswap v4 hook called DualPool. It keeps liquidity-earning yield in Spark’s vaults while idle and pulls it into the pool only when a swap needs it, settling it within a single block.
Spark has also struck infrastructure deals directly with issuers. PayPal teamed up with Spark last year to boost the liquidity of $PYUSD as it competes with Tether’s $USDT and Circle’s $USDC.
MacPherson sees payments as the catalyst that turns fragmentation into volume. With the GENIUS Act coming into force next year and the Clarity Act potentially advancing, he projects onchain payments could reach $3 trillion by 2030.
“It’s going to seem like nothing’s happening,” he said, “and then all of a sudden a lot is going to happen at once.”