Decentralized finance (DeFi) lending protocol Spark has rotated a portion of its treasury reserves from US government bonds into crypto-native yield strategies, signaling new approaches to onchain yield generation as Treasury returns continue to compress.
On Thursday, Spark announced it allocated $100 million of its stablecoin reserves to Superstate’s Crypto Carry Fund (USCC). This is a regulated basis-trading fund designed to generate yield from price differentials between spot and futures markets across major digital assets. The fund allows DeFi protocols to earn market-neutral yield from the same derivatives markets traditionally used by hedge funds.
According to Superstate’s website, USCC manages approximately $528 million in assets and currently produces a 30-day yield of 9.26%.
Superstate CEO Robert Leshner stated that the fund enables Spark "to maintain exposure to yield opportunities uncorrelated with Federal Reserve rate policy." This diversification strategy may prove timely as Federal Reserve officials face increasing challenges in balancing inflation control with economic growth.
Although the Federal Reserve has struggled to anchor the long end of the yield curve, partly due to mounting US fiscal pressures, the 10-year Treasury yield has recently fallen below 4%. Spark noted that the Fed’s rate-cutting cycle could pressure stablecoin issuers and DeFi protocols heavily exposed to short-duration Treasurys, compelling them to seek alternative, uncorrelated sources of return.
Tether remains the largest crypto-native holder of US Treasurys, with over $100 billion in exposure. USDC issuer Circle ranks a distant second. Together, these two stablecoin giants held more than $132 billion in US government debt as of September.
"Right now this is about 2% of the size of the Treasury bills market, but this share will increase should stablecoin supply expand briskly," according to TD Economics.
Onchain Yield Evolves Beyond Passive Income
Onchain yield has long been recognized as one of DeFi's most compelling use cases. Over time, the mechanisms that power yield have become increasingly sophisticated, evolving from simple lending and staking to complex, market-neutral and restaking strategies.
According to research from Galaxy Digital, onchain yield is no longer solely about earning interest; it is about selecting strategies that balance liquidity, complexity, and risk in pursuit of higher returns.
While Spark and Superstate have emphasized the importance of diversifying away from US Treasurys, Galaxy notes that Treasury yields still serve as the benchmark for most onchain yield strategies. This effectively sets a "risk-free floor" for stablecoin and DeFi returns.
As those yields decline, protocols are increasingly turning to crypto-native yield sources such as basis trading, validator rewards, and restaking mechanisms. These strategies remain uncorrelated with traditional interest rate policy.