Spark now supplies more than $400 million in USDC to the cbBTC/USDC lending market on Base. That makes it the source of nearly a quarter of all the USDC in the market.
The numbers behind the vault
Spark is the allocation layer from the Sky ecosystem. It routes its capital through a dedicated Morpho USDC Vault, which in turn feeds the cbBTC/USDC market.
Spark’s vault has allocated over $410 million into that single market, according to the research data. Spark’s own public figure puts it at “over $400 million” and “nearly a quarter” of the market’s USDC.
The market itself is large. Total supplied assets sit at approximately $1.77 billion, with $1.60 billion borrowed.
That works out to a utilization rate above 90%. Put simply, almost every dollar lenders deposit is already out on loan.
Spark adjusts its USDC reserves to track borrowing needs, according to the research findings. Its allocations started modest and grew rapidly from there.
How the market works
The market runs on Morpho as an isolated lending market. Isolated means the risk stays inside this one pairing. Problems with some unrelated asset elsewhere on Morpho do not spill into it.
The market launched on September 4, 2024. It uses an 86% liquidation loan-to-value ratio, or LLTV.
That figure sets the danger line. If a borrower’s debt climbs to 86% of their cbBTC collateral’s value, the position becomes eligible for liquidation.
Rates have cooled as competition for lending has picked up. Lenders currently earn a supply APY of about 4.73%, while borrowers pay around 5.26%.
Earlier, rates sat near 7.5%. The gap between the two rates sits at a little over half a percentage point.
The Coinbase connection
In January 2025, Coinbase introduced Bitcoin-backed loans that let users borrow USDC against cbBTC directly inside the Coinbase app. Users never need to open a separate DeFi interface, and the borrowing happens on Morpho in the background.
The research findings describe Spark as a primary liquidity provider tied to that Coinbase lending launch. When a Coinbase user borrows USDC against their Bitcoin, there is a decent chance some of those dollars came from Spark’s vault.
The market has also seen a 55% rise in volumes year-to-date, according to the research data.
What this means
For other lenders, falling supply APYs from around 7.5% earlier down to about 4.73% show that deep-pocketed players compress returns for everyone else in the pool.
Concentration is the risk worth watching. When one supplier provides nearly a quarter of a market’s USDC, its allocation decisions carry real weight.
The 86% LLTV allows fairly aggressive borrowing against Bitcoin. A sharp drop in Bitcoin’s price could push many positions toward liquidation at once.
Coinbase supplies the front end and the users. Morpho supplies the lending rails. Suppliers like Spark supply the dollars. Going forward, the key metrics are utilization, the spread between supply and borrow rates, and Spark’s share of the pool.
Disclosure: This article was edited by Estefano Gomez. For more information on how we create and review content, see our Editorial Policy.