As Treasury yields decline, Spark’s allocation of $100 million into Superstate’s regulated crypto carry fund indicates a shift in DeFi approaches to yield generation.
New Strategies for Yield Generation
On Thursday, Spark announced that it directed $100 million of its reserves in stablecoins to Superstate’s Crypto Carry Fund (USCC), a regulated trading fund designed to earn yields from price differences across major digital assets. This switch allows DeFi protocols to capture market-neutral yields that hedge funds typically access.
Currently, USCC manages approximately $528 million in assets, with a reported 30-day yield of 9.26%.
Diversifying Yield Opportunities
Leshner stated that this fund allows Spark to pursue yield avenues that are not influenced by the Federal Reserve’s rate adjustments, a strategy that seems timely given the challenges the Fed faces in managing inflation alongside economic growth.
Despite the recovery efforts by the Federal Reserve to stabilize long-term yields amidst growing US fiscal uncertainties—which have seen the 10-year Treasury yield dip below 4%—Spark anticipates that its ongoing rate-cutting measures may compel stablecoin issuers and DeFi platforms that depend heavily on shorter-term Treasurys to explore uncorrelated yield options.
Tether, the major crypto-native holder of US Treasurys, holds over $100 billion in government bonds, while its rival USDC from Circle stands significantly behind. Combined, these stablecoin leaders controlled more than $132 billion in US government debt as of September.
The Evolving Landscape of Onchain Yield
Onchain yield has emerged as a central pillar of DeFi, evolving from straightforward lending and staking to more intricate strategies balancing liquidity and risk. As traditional yield sources like Treasurys diminish, protocols are increasingly looking to crypto-native methodologies such as basis trading, validator rewards, and restaking, resulting in diversified investment strategies that transcend conventional interest rate frameworks.
For more context, Superstate’s insights provide details on asset management and returns.
