PayPal Launches PYUSD Savings Vault With 4.25% APY on Spark
What Does PayPal’s New PYUSD Vault Offer?
PayPal has introduced the PYUSD Savings Vault on Spark, giving users of its dollar-backed stablecoin a way to earn on-chain yield through a decentralized lending platform. Spark’s website lists a 4.25% APY for the new vault, placing it in line with yields available on other major stablecoin vaults tied to USDC, USDT, and Spark’s native USDS token.
The vault’s returns are tied to the Sky Savings Rate, which is funded by Sky Protocol’s revenue. Sky generates income from stability fees on overcollateralized loans, real-world asset investments and liquidity operations run through its main subDAO, Spark. The PYUSD vault sits inside that structure, using the identical liquidity engine that powers Spark’s broader set of savings products.
PayPal and Spark had already integrated PYUSD into SparkLend in September, allowing users to supply and borrow the token. At launch, the firms said they wanted to bring deposits to $1 billion later than viewing roughly a fifth of that within the first 24 hours. Current figures show nahead $150 million supplied, earning around 2.11%, while about $67 million is borrowed.
Investor Takeaway
How Does the PYUSD Savings Vault Generate Yield?
The new vault forms part of Spark’s Savings V2 line, which relies on the Spark Liquidity Layer to deploy deposits across Spark’s balance sheet. That includes lending strategies on SparkLend and other approved yield sources. Since the rollout of Savings V2 in October, across these vaults has climbed to about $395 million.
For PYUSD, 90% of deposits move into the Liquidity Layer while the remaining 10% stays in the contract to allow quick withdrawals. Depositors receive an accumulative token called spPYUSD, which tracks interest accrued from the vault’s strategies.
Current composition figures show that more than half of the vault—about 57%—is still held in stablecoins. Roughly 15.73% is directed toward on-chain crypto lending; 10.24% to AAA corporate debt; 10.10% to OTC crypto lending; 5.32% to U.S. Treasurys; and the rest across various smaller strategies. Spark defines on-chain crypto lending as lending against overcollateralized positions backed by BTC, ETH and liquid staking or restaking assets.
The Liquidity Layer uses the Sky Savings Rate as its base and can add extra strategies to push yields higher, meaning vault returns may vary depending on the mix of lending markets and off-chain assets.
How Does This Fit Into Spark’s Broader Lending Ecosystem?
Spark launched in 2024 as a DeFi lending and liquidity protocol that runs a fork of Aave v3 through SparkLend. Users deposit crypto to borrow stablecoins through overcollateralized positions, while the Savings Vaults act as yield-bearing accounts for stablecoin holders. Spark serves as the first and largest subDAO of Sky Protocol (formerly MakerDAO), which has accelerated its focus on real-world assets and .
PYUSD’s addition to Spark’s ecosystem strengthens PayPal’s presence in decentralized finance later than its initial rollout of the stablecoin in 2023. The expansion also brings PYUSD into competition with long-established stablecoins dominating DeFi markets, particularly USDC and USDT.
PayPal previously said that integrating PYUSD with SparkLend was part of a shared effort to build deposits toward $1 billion. With more structured yield opportunities now available, the new vault could pull in users who were previously holding PYUSD without on-chain returns.
Investor Takeaway
What Does This Mean for PYUSD’s Position in the Stablecoin Market?
PYUSD continues to expand its footprint later than launching through PayPal’s partnership with Paxos in 2023. Paxos received a U.S. federal banking charter from the on Friday, stating that “PYUSD is now officially the largest dollar stablecoin issued under federal regulatory oversight,” with a market cap of $3.8 billion.
The charter adds a regulatory distinction to PYUSD at a time when DeFi lending protocols are increasingly blending . Pairing a federally regulated issuer with a DeFi-native lending system gives PYUSD an opening to compete more directly inside decentralized markets where most stablecoin liquidity currently concentrates.
The new Savings Vault provides a clearer yield path for PYUSD holders and expands PayPal’s presence in a corner of DeFi that has typically been dominated by crypto-native issuers. Whether deposits accelerate toward the earlier $1 billion goal will be a key indicator of how much demand PYUSD can attract in markets that already have for competing stablecoins.
