Spark, a Decentralized Finance protocol, is moving one of its deepest stablecoin liquidity pools deeper into institutional markets by unveiling new lending infrastructure designed to connect on-chain capital with off-chain borrowers outside DeFi. The protocol introduced Spark Prime and Spark Institutional Lending in a Consensus Hong Kong 2025 announcement. The new offerings aim to reach hedge funds, trading firms, and fintechs operating under traditional custody and compliance regimes, expanding access to stablecoin liquidity beyond on-chain venues.
Reportedly, more than $9 billion in deployed stablecoin liquidity will be extended into products tailored for institutions, while off-chain crypto lending is estimated at about $33 billion, highlighting strong demand from regulated market participants wary of direct on-chain exposure. ‘This market is much bigger than the DeFi lending market, and we’re able to issue the same kind of overcollateralized loans Maker has done since its inception, but with access to a much broader set of borrowers.’ Spark Prime introduces a margin lending model enabling borrowers to post collateral across centralized exchanges, DeFi venues and qualified custodians under a single risk framework. That design is intended to improve capital efficiency for hedge funds pursuing strategies such as perpetual futures trading, while giving lenders more direct exposure to funding rates.
The system is powered by prime broker Arkis’ margin and liquidation engine, which can automatically unwind positions across venues if portfolio risk thresholds are breached, enhancing safety for lenders. Spark Institutional Lending is aimed at firms that prefer fully custodial participation. Through arrangements with providers such as Anchorage Digital, institutions can borrow against collateral held in regulated custody while accessing Spark-governed liquidity pools. MacPherson said the design reflects hard lessons from past market failures.
The status quo is still unsecured lending to hedge funds, which can go horribly wrong, he said. Spark has already supported institutional-scale deployments, supplying most of the liquidity behind Coinbase’s bitcoin borrowing product in 2025 and allocating hundreds of millions of dollars to support PayPal’s PYUSD. The new offerings formalize that approach into a broader institutional framework, positioning Spark as a conduit between on-chain stablecoin demand and off-chain capital markets.
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