Decentralized finance (DeFi) lending protocol Spark has moved a significant portion of its treasury reserves from US government bonds into crypto-native yield strategies, marking a shift in how onchain yield is generated amid declining Treasury returns. Spark allocated $100 million of its stablecoin reserves to Superstate’s Crypto Carry Fund (USCC), a regulated basis-trading fund that earns yield from price differences between spot and futures markets for major digital assets. The fund offers DeFi protocols market-neutral yield opportunities traditionally accessible to hedge funds. USCC currently manages about $528 million in assets and reports a 30-day yield of 9.26%.
Superstate CEO Robert Leshner highlighted that the fund allows Spark to access yield opportunities that do not correlate with Federal Reserve rate policy. This diversification comes as the Federal Reserve faces challenges in balancing inflation control and economic growth, with long-term Treasury yields recently dipping below 4%. Spark noted that potential Fed rate cuts could pressure stablecoin issuers and DeFi protocols heavily invested in short-duration Treasurys, pushing them to seek alternative, uncorrelated returns.
Tether remains the largest crypto-native holder of US Treasurys with over $100 billion, followed by USDC issuer Circle. Combined, they held over $132 billion in US government debt as of September. Analysts predict that as stablecoin supply grows, their share in Treasury bills will rise significantly.
Onchain yield in DeFi has evolved from simple lending and staking to more complex and market-neutral strategies. Research indicates that while Treasury yields have traditionally set a risk-free benchmark for onchain returns, declining yields are driving protocols to explore crypto-native sources such as basis trading, validator rewards, and restaking mechanisms, which offer returns independent of traditional interest rate policies.