Spark has partnered with payments giant PayPal to expand liquidity for the latter’s U.S. dollar-backed stablecoin PYUSD. 

Both PayPal and Spark announced a $1 billion liquidity goal for PYUSD after noting that PYUSD deposits on SparkLend had already surpassed $200 million since listing on the protocol in August.

PYUSD will follow Spark’s bootstrapping strategy for stablecoins to scale up. MonetSupply, the pseudonymous head of Spark’s development company Phoenix Labs, explained the flywheel effect that would come from borrowing activity feeding back into PYUSD utility.

This story is an excerpt from the Unchained Daily newsletter.

“As users sell into the Curve pool, Spark automatically takes the other side keeping the price at or above USDS, enabling borrowers to build large positions without pushing PYUSD to a discount,” said MonetSupply.

“The accumulated PYUSD is then fed back into SparkLend, which keeps the utilization and rates for pyUSD borrowers low and stable.”

PYUSD, which currently sits at a market capitalization of $1.87 billion, recently expanded to nine new blockchains, including Avalanche and Tron, after an integration with LayerZero.