Spark Liquidity Layer To Unlock Multi-Chain Functionality For Sky’s USDS Stablecoin

Spark, the money market protocol of the Sky (formerly MakerDAO) ecosystem, is laying the groundwork to unlock multi-chain functionality for Sky’s USDS stablecoin.

On Nov. 18, Spark deployed the Spark Liquidity Layer, allowing users to convert Circle’s USDC stablecoin into Sky’s USDS or yield-bearing savings USDS (sUSDS) stablecoin from multiple blockchains. The protocol will support USDT in the future too.

“This launch unlocks cross-chain liquidity and yield optimization for stablecoins across different protocols in an automated and on-demand way,” Spark said. “By creating liquidity between USDC, USDS, and sUSDS across multiple chains, the Spark Liquidity Layer allows USDS liquidity to grow on new networks.”

Spark told The Defiant that it will roll out liquidity layer support for networks other than Ethereum around early December. Supported networks will include the leading Layer 2s Base, Arbitrum, Polygon, and Optimism, and the booming Layer 1 network Solana.

Spark emphasized that the liquidity layer offers greater speed than canonical bridging infrastructure.

Spark is currently the third-largest web3 lending dApp by total value locked (TVL) and the 10th-largest DeFi protocol overall with nearly $3.73 billion, according to DeFi Llama. Sky ranks fifth with $6 billion.

USDS adoption

The news comprises the latest effort from the Sky ecosystem to bolster USDS adoption.

USDS went live on Sept. 18, with holders of Sky’s previously existing stablecoin, DAI, able to convert their tokens for USDS on a one-to-one basis to access USDS yields.

While USDS quickly grew to surpass a $1 billion capitalization within two weeks, the asset’s growth has since petered out. USDS is currently sitting at a $1.05 billion market cap after peaking at $1.29 billion on Nov. 10.

Users have converted $759.5 million DAI into USDS so far. DAI continues to make up 80% of the two stablecoins’ combined $5.27 billion capitalization.

One quarter or $1.35 billion of the combined capitalization is currently deposited in the Sky Savings Rate protocol.