Spark has deployed 100m in stablecoins to Base, enabling users to swap in and out of Savings USDS at large scale with no slippage or fees. As the largest L2 with a rapidly growing user base, Base is a natural first choice, however, Spark will rapidly expand to cover all chains.

Until today, those seeking yield on their stablecoins have had to deal with volatile rates due to fragmented liquidity in DeFi. The Spark Liquidity Layer exports this yield cross-chain, reducing rate volatility by unlocking scalable yield generated by all of DeFi on the user's preferred chain - not just Ethereum.

The Spark Liquidity Layer enables the true potential of DeFi to deliver stablecoin efficiency across all blockchains - resulting in the ability for users to capture more yield opportunities. Users simply deposit their stablecoins into Spark with the knowledge that the largest decentralized stablecoin protocol is working on their behalf to deliver the best risk-adjusted yield.

It’s the size of Spark’s balance sheet (5.4b) that allows the project to provide the most scalable yield at the most predictable and stable rates. Unlike chain-specific lending markets where someone depositing 10m USDC will crush the rates, Spark exports the scale of Ethereum mainnet to provide this rate at any size on any chain.

One of the challenges of taking a yield-bearing stablecoin to another chain is bootstrapping liquidity - a critical hurdle that can tank a project if mismanaged. The common strategy for bootstrapping liquidity is to incentivize market makers with yield farming opportunities, however, we find this strategy does not scale well.

Spark’s solution to bootstrapping liquidity is to act as the market maker and ensure liquidity is available on the chain when needed. Spark’s access to 1.3b liquid USDC on Ethereum mainnet guarantees that exit liquidity is available when needed - regardless of amount. The result is that USDC holders can access the best risk-adjusted yield without worrying about liquidity being available when they want to exit.

If you want to learn more about how the Spark Liquidity Layer works in detail, including the role of the Peg Stability Module (PSM), please visit: https://docs.spark.fi/user-guides/spark-liquidity-layer

The economies of scale ensure that Spark’s unique benefits are not just relevant for DeFi. Spark can maximize yield generation across all opportunities in DeFi, CeFi and TradFi while providing strong peg guarantees due to the on-demand automation of exit liquidity. DeFi is actively consuming the behemoth that is traditional finance and Spark, as the largest player, is best positioned to absorb all opportunities.

This is the first phase of the Spark Liquidity Layer which will become the ultimate yield-generating strategy. We will dive into the details of the allocation phase in a follow-up article.