Nikolas Sargeant
Spark announced the launch of Spark Prime and Spark Institutional Lending on Wednesday, aiming to channel decentralized finance stablecoin reserves into institutional credit markets as traditional finance increasingly explores blockchain-based lending infrastructure.
Spark, a decentralized asset allocator whose core contributor Phoenix Labs previously helped design MakerDAO's stablecoin and risk architecture, stated the new suite enables borrowers to access stablecoin loans without operating their own DeFi infrastructure. The products represent Spark's effort to bridge decentralized liquidity pools with institutional borrowing demand.
Spark Prime offers margin-style lending and off-exchange settlement powered by Spark's liquidity engine, while Spark Institutional Lending integrates Spark-governed markets with qualified custodians including Anchorage Digital, allowing clients to maintain collateral inside regulated custody frameworks. The dual approach addresses different institutional preferences around asset custody and operational complexity.
According to Spark, early launch partners for Spark Prime include Edge Capital, M1, and Hardcore Labs. Phoenix Labs co-founder and CEO Sam MacPherson told Cointelegraph that institutional lending already has approximately $150 million in commitments, with capacity "to scale to billions over the coming months," while Spark Prime is starting with roughly $15 million and will expand more gradually as "key safety features" are implemented.
According to data from DeFi Llama, Spark's total value locked currently stands at $5.24 billion, down from a peak of $9.2 billion in November 2025, positioning it among the larger DeFi money market platforms by assets. By comparison, Aave leads DeFi lending with $27 billion in TVL, while Maple maintains $2.1 billion.
Spark stated it supplied more than 80% of USDC liquidity for Coinbase's Bitcoin-backed loan market on Morpho, helping drive approximately $500 million in loan growth during the first three months. Public dashboards show Spark-linked vaults have deployed over $600 million to that market since launch, demonstrating substantial institutional appetite for cryptocurrency-collateralized lending.
PayPal's PYUSD stablecoin program has utilized about $500 million in Spark-governed liquidity to deepen onchain markets for PYUSD and other stablecoins. The partnership reflects growing integration between traditional payment companies and DeFi infrastructure for stablecoin distribution and liquidity provision.
The launch highlights how DeFi has performed relative to cryptocurrency prices during recent market declines. Currently at $96.52 billion, overall DeFi TVL has fallen from approximately $120 billion at the end of January, representing a 20% decline during the recent cryptocurrency selloff.
Over the same period, Bitcoin dropped from about $89,000 at the end of January to $66,800 at the time of writing Wednesday, a decline of approximately 25%, while Ether fell from roughly $3,000 to approximately $1,950, down around 35%, according to CoinGecko data. The divergence suggests DeFi applications have retained user deposits despite broader market volatility.
MacPherson argued one advantage of Spark's model is that "anyone can evaluate the full portfolio in real time," adding that institutions can underwrite its holdings against their own risk limits and exit "if the profile does not align with their risk controls." The transparency contrasts with traditional credit markets where portfolio composition often remains opaque to borrowers.
