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Spark Allocates Over $400 Million USDC to Morpho's Bitcoin-Backed Lending Market
Spark has supplied more than $400 million in USD Coin (USDC) to the cbBTC/USDC lending market on Base, representing nearly a quarter of the total USDC in this market. This lending market, which operates on the Morpho platform, has seen significant activity, with total supplied assets reaching approximately $1.77 billion and a borrowing figure of around $1.60 billion, resulting in a utilization rate exceeding 90%.
The cbBTC/USDC market, which launched on September 4, 2024, allows users to borrow USDC against their Bitcoin collateral. Spark's allocation layer, part of the Sky ecosystem, routes its capital through a dedicated Morpho USDC Vault, which feeds directly into this lending market. As competition for lending has increased, supply annual percentage yields (APY) have decreased from around 7.5% to approximately 4.73%, while borrowers currently pay about 5.26%.
Coinbase, a major cryptocurrency exchange, introduced Bitcoin-backed loans in January 2025, enabling users to borrow USDC against their cbBTC directly within its app. Spark is identified as a primary liquidity provider for this lending service, indicating that a significant portion of the USDC borrowed by Coinbase users likely originates from Spark's vault. The market has also experienced a 55% increase in volumes year-to-date, highlighting its growing popularity among lenders and borrowers alike.
The lending market operates with an 86% liquidation loan-to-value ratio, meaning that if a borrower's debt reaches 86% of their collateral's value, their position may be liquidated. This structure allows for aggressive borrowing against Bitcoin, but it also raises concerns about potential liquidations in the event of a sharp decline in Bitcoin prices. As Spark continues to play a crucial role in this market, key metrics such as utilization rates and the spread between supply and borrow rates will be critical to monitor.
Source: KLEA News