Spark Moves $100M From Treasurys to Crypto Yield

Decentralized finance (DeFi) lending protocol Spark has converted some of its US government bond reserves into crypto-native income strategies, signaling new approaches to generating on-chain income as Treasury yields continue to shrink.

On Thursday, Spark said it has allocated $100 million of its stablecoins to Superstate’s Crypto Carry Fund (USCC), a regulated exchange-traded fund that generates revenue from price differences between the spot and futures markets across major digital assets. The fund enables DeFi protocols to earn market-neutral returns from the same derivatives markets traditionally used by hedge funds.

According to the Superstate website, USCC manages about $528 million in assets and currently produces a 30-day yield of 9.26%.

Superstate CEO Robert Leshner said the fund allows Spark to “maintain exposure to income opportunities unrelated to Federal Reserve rate policy.” Such diversification may prove opportune as Fed officials face increasing challenges to balance inflation control and economic growth.

Although Federal Reserve System has struggled to anchor the long end of the yield curve, in part due to rising US fiscal pressures, the 10-year Treasury yield recently fell below 4%. Spark noted that the Fed’s rate-cutting cycle could pressure issuers of stablecoins and DeFi protocols with heavy exposure to short-term government bonds, forcing them to seek alternative, uncorrelated sources of returns.

Tether remains by far the largest holder of crypto-native US Treasuries with over $100 billion in exposure. In a distant second place is the issuer USDC Circle. Together, the two stablecoin giants held more than $132 billion in US government debt as of September.

“Right now, it’s about 2% of the size of the T-bill market, but that share will increase if the supply of stablecoins expands rapidly,” according to TD Economics.

Related: US government shutdown ‘likely’ to end this week, Trump aide says

Onchain income is developed outside of passive income

Yield on the chain has long been considered one of DeFi’s most compelling use cases. Over time, the mechanisms that drive yield have become increasingly sophisticated, expanding from simple loans and bets to complex, market-neutral and repurchase strategies.

According to research by Galaxy Digital, onchain revenue is no longer just about earning interest – it’s about choosing strategies that balance liquidity, complexity and risk in pursuit of higher returns.

While Spark and Superstate emphasize the importance of diversifying away from US Treasuries, Galaxy notes that Treasuries yields still serve as the benchmark for most onchain yield strategies, effectively setting a “risk-free floor” for stablecoin and DeFi yields.

As these revenues decline, protocols are increasingly turning to crypto-native revenue sources such as base trading, validator rewards, and resuming mechanisms. These strategies remain uncorrelated with traditional interest rate policy.

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