Decentralized finance (DeFi) lending protocol Spark has shifted a substantial portion of its treasury reserves from US government bonds into crypto-native yield strategies, signaling innovative approaches to onchain yield generation amid falling Treasury returns. On Thursday, Spark revealed a $100 million allocation of its stablecoin reserves to Superstate’s Crypto Carry Fund (USCC), a regulated basis-trading fund that profits from price differences between spot and futures markets across key digital assets. This fund offers DeFi protocols the chance to earn market-neutral yields from derivatives markets typically utilized by hedge funds.
Superstate’s Crypto Carry Fund manages approximately $528 million in assets and currently delivers a 30-day yield of 9.26%. Superstate CEO Robert Leshner emphasized that the fund enables Spark to “maintain exposure to yield opportunities uncorrelated with Federal Reserve rate policy.” This diversification comes at a critical time as the Federal Reserve grapples with balancing inflation control and economic growth.
Despite challenges anchoring the long end of the yield curve partly due to increasing US fiscal pressures, the 10-year Treasury yield recently dipped below 4%. Spark noted that the Fed’s rate-cutting cycle could place pressure on stablecoin issuers and DeFi protocols heavily reliant on short-duration Treasurys, driving them toward alternative, uncorrelated returns. Notably, Tether holds the largest crypto-native exposure to US Treasurys with more than $100 billion, followed by USDC issuer Circle, with both together holding over $132 billion in government debt as of September.
Onchain yield generation, a core appeal of DeFi, has evolved from straightforward lending and staking to complex market-neutral and restaking strategies. Research from Galaxy Digital highlights that onchain yield now requires balancing liquidity, complexity, and risk for optimized returns. While Treasury yields remain a benchmark, their decline is pushing protocols towards crypto-native yield sources like basis trading, validator rewards, and restaking, which remain uncorrelated with traditional interest rate movements.