# Stablecoin Infrastructure and Institutional DeFi Adoption

**Podcast:** The Milk Road Show
**Published:** 2026-10-20

## Transcript

We know that like every institution, every bank has some degree of a stablecoin plan at this point.
They would be negligent if they didn't have some sort of plan about how to get involved.
Stablecoins moved tens of trillions of dollars on chain last year, but according to a new report from Cetrini Research, only a tiny sliver of that was people actually paying for things.
So what are stablecoins if they are not payment rails?
And what do investors need to know about all of this?
Hello and welcome to Milk Road Crypto, the show that always brings the spark, even when the markets don't.
I'm your host, John Gill, and today is Tuesday, October 20th.
And today we are joined by Sam McPherson.
Sam is the co-founder and CEO of Spark, the biggest capital allocator in the Sky ecosystem, formerly MakerDAO.
Sam is one of the best people to talk to about all things crypto.
So he's going to share a ton of alpha with us today.
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But without further ado, welcome to Milk Road Crypto.
Sam McPherson, welcome sir, how are you?
Yeah, I'm doing great.
Thanks for having me.
Sam, I'm really excited to talk to you today.
You are one of the oldest and most vetted builders in all of crypto.
So I'm excited to get some wisdom from you today.
I thought a good place to start the show would be with just telling us a little bit about Spark.
Because for people who are new to crypto, they may not be familiar.
What is Spark and where does it sit in the Sky ecosystem?
So Sky, which is a rebrand from MakerDAO, has existed since basically the beginning of DeFi, originally launched in 2019 even.
Part of this is there was a rebrand to Sky, but part of the upgrade that occurred starting in about 2022 was a restructuring of the governance such that Sky sits, I think this is a useful analogy, Sky sits as like more like a central bank that issues wholesale liquidity to sub-DAOs of which Spark is one of those.
Spark sits as more of a like similar to a commercial bank.
in that we take in deposits and then we are lending our book mostly against over collateralized crypto.
Yeah, this restructuring has a number of benefits, both from the governance side, but as well as sort of scaling the system as a whole.
So a little bit about Spark.
Spark is a capital allocator across DeFi, CeFi, TradFi.
And so we have a number of products.
We have SparkLend, which is our...
pooled lending market, which lends against crypto, Bitcoin, ETH, LSTs, these types of things.
It is the second largest pooled lending market at $5 billion in TVL as of today.
And yeah, it's been growing quite a bit over the past few months.
Spark also has another product called Spark Savings, which allows you to earn on your USDC, USDT, and increasingly we're supporting newer stablecoins that are coming to market.
This is basically a treasury management product that's designed to be highly liquid with the underlying so that people can get, institutions in particular, can get in and out of the Spark savings at large size, hundreds of millions even.
We also have institutional OTC crypto lending product.
This is loans through qualified custodians such as Anchorage against Bitcoin.
And we also more recently launched a product called the Stablecoin FX layer.
where we facilitate clearing between stable coins, especially the smaller ones who need liquidity with mainly like USDC, USDT.
So we'll do market making there on chain through Uniswap and provide large amounts of liquidity so that people who are using these newer stable coins, such as PayPal, Pi, USD, RL, USD, USDG, et cetera, can swap with the other more larger stable coins.
You guys are one of the oldest projects in DeFi, as you said, but you're also still innovating.
You guys have called yourselves the largest capital allocators on chain with over $3 billion deployed.
And as you referenced, this stablecoin FX layer, which is a relatively new product, has done over $15 billion in volume since June.
Talk to me about how the bear market versus bull market dynamics work for your business.
Do these product lines tend to perform better in a bull or a bear?
Does it not matter?
And what are those dynamics like that drives this huge growth in Spark?
Yeah, I would say increasingly we have coverage across a wide range of the market conditions and sort of diversifying away from the crypto bull cycles.
But we still do make a fairly large return.
The core business is allocating the USDS balance sheet into opportunities across primarily like DeFi, C5, these types of things, and then earning a net interest margin on that.
So during bullish conditions like...
the revenue can be three, four times higher than it is during bear conditions.
So there is still this cyclicality to it.
But increasingly, we see a lot of growth with what I think is really driving the fundamental growth of crypto right now, which is stablecoin adoption.
So we see, you know, initially it was exchanges that are launching stablecoins, but now we see fintechs, more Trad5 players coming into the space.
Robinhood being a good example of this.
And now increasingly, we're talking to even banks as well.
And I think this is going to really accelerate as genius comes into effect at the beginning of next year.
This pullback on Bitcoin is scaring a lot of people and I am not one of them.
So if you want to see what I'm not selling and why, what's on my watch list and when I'm going to be deploying more capital into these markets, you can join Milkrow Pro today.
It's just a dollar.
The link is in the description.
I answer questions day and night in Discord.
I'll see you there.
Okay, so there's a lot to unpack here.
One of the things I wanted to ask you about before we get into what next year looks like.
When the KelpDAO exploit happened earlier this year in April, what stood out to me a lot was that Spark had already dropped KelpDAO and the collateral that was the contagion in this attack back in January, months before the attack happened.
And it seems like you guys identified a risk before others did.
Talk to me about that process because I think security concerns, because of AI and quantum, many other things are a growing concern in DeFi.
It seems like you guys were early to catch this risk here.
How did you do that?
What were others missing?
What was that like?
Yeah.
So this is a product of just having gone through many cycles, especially during the bull periods.
There was sort of this like pressure, competitive pressure to risk on.
And we've always taken this more conservative tack where, you know, we don't necessarily get the most explosive growth during the bull market periods, but we also are durably growing the balance sheet and deposits over time.
This is just sort of our general posture, but to get into specifics about the RSEth incident.
So we do list a number of collateral on SparkLend.
This is our pooled lending market.
We did list RSEth at one point, but it was under very conservative limits.
We had nowhere near as much exposure as Aave did.
They were the big target during that incident.
Really what happened was we saw this wasn't, we routinely take looks at the collateral that is allowed on Sparkland and we'll remove them if they're not, if the risk adjusted return is not favorable.
So we off-boarded this in January of this year, just as part of a regular de-risking process.
So like we do not have a crystal ball into what particular failure will happen.
All we know is this space is very new.
And as you say, AI is accelerating the hacks.
And so we are just taking a very defensive posture, de-risking, removing as much tail risk as we possibly can, and just focusing on the high scale collateral.
So a part of some of the features that we have in Sparkland that we differentiated ourselves pretty early on, we have rate limits in the amount of supplies and borrows that can go into the market.
If you have even an institutional borrower, they often do not need to.
put up $1 billion in collateral and then borrow $500 million in one go, they'll move it up in chunks.
And so they're perfectly okay to do this over the course of several days.
And so rate limits are an extremely important factor, which is a big deterrent for hackers for using lending markets as an escape hatch for getting into more decentralized assets, such as the RSE to ETH was the trajectory that went through ABE.
So this is one of the features we've had in Sparkling from the beginning.
Additionally, we have a triple redundant oracle that is resilient to oracle failure of any single infrastructure.
But in general, this is always our biggest concern, especially in the age of AI, is removing these risks where we see them, updating our threat models, and just making sure we keep a very defensive posture.
Now, we have a very limited set of collateral that we allow.
So we're allowing ETH, LidoStake ETH, EtherPhi, WETH.
WBTC and CBBTC.
So these are the five collateral that we allow to borrow stablecoins on SparkLend.
We also are very limited in sort of this high leverage rehypothecation of collateral.
Some other lending markets out there allow you to do looping is usually what it's called with ETH with many different LSTs.
And we are limited to just Lido staked ETH for looping with ETH because we think These types of activities need to be done in a very conservative fashion.
They are useful.
People do like to earn yield on their ETH while they're borrowing stablecoins.
But we really take a lot of time and sort of like look at what the actual scalable use cases are, focus on them, and then eliminating all the tail risk to the best of our ability.
Okay, Sam, that's very helpful.
And I think it puts a lot of investors' minds at ease to hear that you're taking sort of like a belt and suspenders at the same time approach to risk management and security here.
And it seems like that's definitely paid off so far.
So congratulations on that.
Sam, I want to talk a little bit about something that I've seen you discussing a lot recently, which is Satrini Research's new paper called Breaking the Wall.
And this paper is all about the wall between Wall Street and crypto coming down.
And before we get into the paper itself, I'm really curious your perspective on...
on institutions coming to crypto and what that has been like from your perspective at Spark and how this wall is coming down and what's happening as these two worlds are starting to collide.
So I would say that like really the most important thing when it comes to either TradFi or crypto is where's the liquidity?
This is what drives people to use particular venues and it's sort of a universal reality.
And so really, if you want to have, if you believe in the thesis sort of that TradFi will eventually all come on chain.
You have to look very critically at what is driving that.
And this is quite clearly, there is the store of value use case with Bitcoin, ETH, wherever you want to draw the line.
But stablecoins are the strong product market fit that is fundamentally driving a lot of this.
And so why is that?
Stablecoins are quite useful for cross-border payments, instant settlement, and just optimizing fees in general, not having to pay.
these banking fees like with wires whatnot stable coins just like completely eliminate the friction of that and so this is this is fundamentally why you see institutional adoption uh coming but we're still very early days and it's because although we have the regulatory clarity we know the path we're on right now with genius it's not yet come into effect it will come into effect at the beginning of next year and then you'll see a lot of the the bigger players there's sort of the very innovative forward companies that are coming in right now.
But you'll see a lot of the bigger players coming in after that.
And so that is sort of the wedge that will drive TradFi to increasingly use on-chain rails.
And then you can layer in all the utility on top of that.
And that's really where Spark sits, is enabling utility on top of stablecoins.
So you have an institution who wants to launch a stablecoin.
That's all well and good.
But then people have the stablecoin.
What do you do beyond that?
earn a yield.
You want high liquidity with the assets that you care about.
And so Spark is really the liquidity plumbing that supports these newer stablecoins.
And even though some of these institutions have larger balance sheets, they would prefer to work with a DeFi native protocol to bootstrap this liquidity just because it's very unfamiliar territory for them.
And so this is where we view a lot of product market fit with Spark in dealing with these institutions that they want to use.
the usds balance sheet to grow their stablecoin liquidity on chain okay i think you're getting to something that i wanted to ask you about as well because you've talked about this before there's going to be two layers of money in this new world one is going to be where the stable coins sit and where they move and then below that is going to be this credit layer where sky and where spark are talk to me about a little bit more of like what falls into each bucket, what differentiates the two of them?
And then, you know, how do you see Spark in terms of competition or differentiation?
What makes it attractive to institutions in that reality?
Yeah, this is kind of an interesting differentiation point between TradFi and crypto in that crypto, at least with genius compliance, stable coins function as narrow banks.
They're just like deposited into treasury bank deposits, like just very low risk stuff.
And then, You can have this credit layer on top, which is providing yield on top of the sort of the money layer.
So I view in the money layer, this is more like your USDC, USDT to a certain degree, although it's a little bit more mixed with USDT.
But I would say like with the emergence of onshore stable coins, you know, your PiUSD, ROUSD, like USDG, OUSD, et cetera, et cetera.
These serve as sort of the money layer where it's for payments, it's for high liquidity.
these types of operations.
And then you have the credit layer, which is splitting out sort of the lending side of what banks normally do within TradFi.
These are now kind of two separate things.
So USDS is a fractional reserve.
It's not running a full reserve.
And so there are certain trade-offs with that.
But the upside is that you earn this sort of relatively safe yield on your stablecoins.
And through Spark Savings, we can make that available.
to USDC, USDT holders and package it up in a nice way.
Gotcha.
Okay.
So I'm curious about what makes this distinct and attractive just from like a yield perspective, right?
Because the sky savings rate is around 3.8% right now.
This is about what you could get from a T-bill.
What makes this attractive as opposed to just going into T-bills or bonds?
Talk to me about the differentiation there and why someone would choose your rate over other rates they can get other places in the market.
Yeah, I think this is a great question because if you just look at it, it's like, yeah, obviously, if you go into a money market fund or some treasury bill product, it's a lower risk.
I would not say otherwise.
What is the important differentiating factor?
It's not the yield, it's the liquidity with the on-chain environment.
So we do see users coming into Spark Savings.
USDS balance sheet has been growing even during the bear market.
It's up to past 10 billion now.
And where the users, there are a number of users that need high liquidity with USDC and USDT in particular.
So this is where we see strong product market fit with something like Spark Savings, where yes, it's generating basically a SOFR yield, but it has a lot of the liquidity.
USDS is one of the largest holders of USDC on chain and now over like 4 billion in USDC that Sky holds that can be immediately swapped for USDS.
And so this high liquidity provides a lot of benefit for maybe funds want to be, there's value in being liquid with USDT for doing some trading strategy, or there is some major institution that has their own liabilities in USDT or USDC, and they need to be extremely liquid, like able to swap hundreds of millions in a moment's notice.
And really, this is where something like Spark Savings is one of the few products in the market that's available.
And so really, you need to think about it like, are you on Chainland or are you in TradFi?
And if you're in TradFi, you have high liquidity with Money Market Fund.
So you'll use that.
But if you're on-chain, there is a gap between TradFi and DeFi on-chain finance.
And so this is where Spark Savings sits as a compelling product.
Okay.
Interesting.
I think that makes a lot of sense.
I want to ask you about the asset classes that are moving on chain and how this potentially changes your business.
Because Satrini pointed out that tokenized treasuries are about three and a half times bigger than tokenized stocks right now.
And tokenized stocks are the ones that are getting all of the headlines.
And I'm curious your thoughts on this.
Is your focus more on the huge amount of tokenized treasuries and that growing?
Are you more interested in tokenized equities as they start to come on chain?
What's the opportunity for Spark?
What's your focus?
Tell me about that.
that as these different asset classes are starting to come on chain.
Yeah.
So the reason that's driving a lot of the growth of tokenized treasury is who are the biggest buyers of these?
And it is yield bearing stable coins such as Sky.
So Sky is a large holder of treasury bills as part of its backing assets to generate yield.
One of the issues with it from a user perspective is again, this liquidity issue.
If it's packaged up where you're fully liquid with USDC, for example, but you can still earn the treasury bill rate, this is a very compelling product.
And then on the back end, these yield bearing stable coins that balance between liquidity and yield can provide this yield with well maintaining high liquidity with the more established stable coins.
This is where the strong product market fit is.
So where, and again, I'll go back to where, what is the driver behind everything and it's stable coin adoption.
And so.
It's only natural that USD-denominated products such as treasury bills, and I think AAA corporate debt is another good example of where you have an investment-grade product, but it's USD-denominated, it's stable against USD, and so you get a lot of back-end growth from stablecoin growth.
Now, where we're entering is the next phase, which is more assets coming on chain.
And what is driving that is the access to cheap liquidity, lots of excess liquidity.
which is the case for stable coins, there is a large amount of excess liquidity, a little bit less so since the bear market and the hacks going on, but there still is an excess of liquidity within the Sky Protocol.
And so being able to issue loans, cheap loans against tokenized equities is sort of the next stage.
And it's just like this process of bringing things on chain one piece at a time and things need to grow with where there's the demand side.
uh for the borrowers and that is being driven by cheaper rates being made available due to global competitive markets on chain and uh with the yeah with the uh stablecoin growth side which is uh yeah it comes back to stablecoin growth with that Okay.
At the risk of having you repeat yourself, I'd like to understand this idea a little bit more because I haven't heard anyone else make this connection before.
You gave a presentation at Token 2049 recently, and you said that tokenized stocks and other assets will follow on-chain once borrowing gets cheaper on-chain.
Why is that such a key bottleneck here?
Because I haven't heard anyone else say that.
Explain that bottleneck to me and why you think that's the big hurdle to get over to bring a lot of these assets on-chain.
Yeah.
So if you look at if you have stocks, most people have stocks in their brokerage and they can borrow against them there.
So really, but there are decently sized margins attached to that, say, on like interactive brokers or something.
So what needs to ultimately drive this is competition.
So a race for better rates.
And this is really the big unlock that blockchain and like crypto provide.
is that instead of having a handful of companies that can charge high margins, you now have a global market you're competing on in DeFi.
So if you have, say, some isolated market in Morpho, this is now opened up to people on the LPing side, on the borrowing side, and it can be made into a nice wrapper, such as the case in Robinhood and Coinbase, where they use their own consumer apps to expose this to their users in a nice interface.
But then the rates are ultimately going to be what makes people take this seriously and actually move their capital over.
They need to be getting a better deal.
They're not going to be doing it for the idealism of DeFi.
So this is really how I see this playing out.
And yeah, I think we're just at the beginning stages.
I foresee a lot of growth in stablecoins starting at the beginning of next year.
And so then the cheap rates that are available because of this.
global market, global competitive market is really what's going to drive people on the borrowing side for something like tokenized equities.
Okay.
So build a better product, offer a better deal.
It's more attractive.
The capital follows.
It makes sense to me.
Another thing that I've heard a lot of people saying, and Cetrini argues this too, is that AI agents are going to need to move money 24-7.
And that is what's finally going to...
break the wall, so to speak, and bring all this capital on chain.
I've heard you say this too.
How far away in the future is that in your mind?
And what does that look like right now in terms of adoption of AI agents of stable coins and things like DeFi?
It's a very interesting thing.
Now we're everyday people.
I think this AI hasn't really...
We're in a tech bubble, so we see all the adoption.
I mean, we're using it extensively within our company.
But I think the average person is still just barely starting with AI.
But now you can ask your agent, say, here's my accounts.
Optimize them for me.
This is a very strong driver of the individual that'd be like, give me more money.
So ultimately, this will just break down some of these frictions that we've had within the banking.
And actually, I would say it's even propping up the banking system to a certain degree.
is just this friction where users will, people will just sit their money in a checking account that pays zero.
You know, they're taking on the risk of the bank runs and stuff like that, but they're not being paid anything for it.
Really, they're being taken advantage of by the banking system.
And so having this hyper-connected, you know, blockchain environment where, you know, movement is as easy as talking to your AI agent, like what, you know, what should I be doing?
Here's my risk profile.
We'll be breaking down a lot of these barriers.
Ultimately, I think this is a good thing.
I think the traditional banking system taking advantage of people, effectively, it's like a tax on people who are not as nimble with their money.
And this is bad for the economy, I think.
Money should be fully empowered.
The individual should be empowered as much as possible to do with their assets what they want to do.
And I really truly believe we're going to move away from this world where it's predicated on frictions, basically, and trying to capture consumers.
And I think this is a much, much better world to live in.
An analyst who I've had on this channel several times, Jordy Visser, recently said on a podcast that friction is the opportunity now.
It's like Amazon, you say, your margin is my opportunity.
The friction is now the opportunity that the crypto is coming for us.
That's really encouraging to hear.
I'm excited to see how that plays out.
I know it's early days, but the AI agent's changing things.
efficiency.
This is going to be really exciting.
Okay, I want to ask you a question about this, just because a lot of people have looked at this landscape of DeFi and said, there's clearly a huge opportunity here, but banks are going to just build their own versions of these products as opposed to plugging into DeFi that we've already built.
Satrini, in his paper, says that he thinks banks aren't going to build, that they are going to plug into DeFi, and yet a lot of banks are still kind of building their own things, their own stablecoins, their own chains, things like that.
How do you see this playing out?
Do you think we're going to get into a world where the legacy incumbent players build their own versions of these things and keep ownership of them?
Or do you think eventually that capital does come to public infrastructure and existing DeFi projects?
What does that look like in your mind?
Yeah, I think it's going to be a mix of things.
Where I see, I think it makes a lot of sense for these, like how I view it is there's sort of the distribution channel.
And so this can be exchange fintech, you know, whatever.
So for example, like.
You have Robinhood, Robinhood chain, you have Coinbase, base chain, you have Stripe, Tempo.
I think this pattern will remain where you have the chain that is essentially an extension of the distribution channel, whatever that may be.
But the liquidity, I believe, is going to continue to consolidate on, I would say Ethereum specifically, maybe Solana.
But like, yeah, these public blockchains, I do see like a consolidation because like, again, like liquidity is the whole thing.
And so if you have A competitor that like, you're not going to use your competitor's chain.
And so where is the place that everybody's going to like just consolidate and build network effects around it, whether they want to or not is going to be public infrastructure that's neutral.
And so I think we're still early stages.
So everybody's trying to take a crack at this and maybe they're successful.
You know, we're fairly agnostic as to the, how, how this all ends up.
We want to support everybody, but how I see it kind of playing out is Ethereum is the RWA.
lead right now.
And just due to network effects, that effect just tends to compound.
This is a safe place, Sam.
It's okay to say Ethereum here.
We can all say Ethereum.
It's fine.
I'm bullish too, but that makes a lot of sense.
And I think that those gravitational pulls will be effective for that capital at some point soon too.
You have been talking to a lot of these major institutions about coming on chain.
What are those conversations like?
Have you seen any particular sections of the market more excited to come into this opportunity, other people being more hesitant?
Where have those conversations been in 2026 and what's that been like at the moment?
Yeah, our interaction with institutions is primarily through our liquidity allocation service.
So this, I kind of was mentioning this before, we will do market making with our own balance sheet, with the USDS balance sheet.
In Uniswap, we will deploy into SparkLend, Morpho, we can onboard these new stablecoins and do swaps of our own inventory as well.
So we see extremely strong product market fit here.
If you're a new issuer, issuing a stablecoin is the easy part.
That's not difficult.
Building the network effects around that stablecoin is the more difficult part.
And we're able to help out with this.
Yeah, maybe I'm repeating myself a bit, but these institutions, this is the wild west of them.
They don't know what's going on.
And we are industry experts.
We've been around since the beginning of DeFi, so we know it extremely well.
And so for the path of them getting involved, it makes much more sense for them to partner with somebody like Spark.
versus trying to roll everything themselves and build out their own in-house team.
So we see basically with every conversation we're having, and these are some major names that are coming soon, it's quite positive.
They're extremely happy to work with us.
We're already working with major players like PayPal, Ripple.
We have the integration like the Robinhood Earn product with Spark Savings, USDG, as well as other exchanges.
This is sort of the inroad that we've had, and we see a very strong product market fit here.
Okay.
I want to come back to something that you said earlier, which is that the Genius Act goes fully into effect in January of 2027.
Talk to me about what happens at that moment.
Do we just see this huge land grab in the Wild West, or is it sort of like an orderly takeover by the banks and institutions?
What's Spark's strategy in that environment?
What do you expect to happen once January gets here?
Talk to me about what that looks like as we get into a fully genius, effective world.
Yeah, so where we sit, much like I was mentioning, sort of public infrastructure sits as like the neutral ground that I think is going to be used for a lot of the, where a lot of the liquidity consolidates.
We want to be this neutral, sort of more active liquidity deployment layer within sort of this multi-stablecoin environment.
And I think we're going to see, right now we're seeing the beginnings of like, and it's primarily onshore stablecoin growth.
Tether is still very dominant and offshore, and I don't think that's going to change.
For the onshore landscape, we want to sort of sit neutral and provide support for all the stablecoins as they come on chain and really provide a lot of our expertise for helping them to grow themselves.
And yeah, really, like as the neutral layer, we are not we do not have our own like, you know, genius compliance stablecoin.
We firmly position ourselves as the credit layer that's sitting on top of that.
And so with this positioning, I think it's going to grow quite naturally with the market.
We view stablecoins right now is about 300 billion.
The reports that are looking at like about 3 trillion by 2030, we completely agree with those.
And we want Spark and sort of the USDS balance sheet to grow alongside this growth of this multi-stablecoin world.
I'm curious your thoughts on stablecoin growth, because we've seen stablecoins not shrinking, but more or less plateauing and kind of going sideways throughout 2026.
What do you attribute that to?
Do you think it's just a bear market symptom?
Do you think it's something else that needs to happen to really bring more capital on chain or into stablecoins specifically?
What do you see as the next catalyst for the growth of adoption of stablecoins specifically?
So this has been quite...
like bullish i would say i know the the market cap hasn't been increasing of stable coins for the past year or so but the fact that it's not decreasing is is a step up from previous bear cycles so why is it it's it's flat but we've been through a bear market for the past year and this tends to coincide with stable coins decreasing so the fact that they're flat i think is quite positive and then the other big catalyst i think is going to be genius coming into effect next year and these much bigger players getting involved in full force.
So we know that every institution, every bank has some degree of a stablecoin plan at this point.
They would be negligent if they didn't have some sort of plan about how to get involved.
And this is going to be the starting gun that really gets this.
And so where we exist in a year or two years from now, where there's maybe tens of difference of major stablecoins that are all competing, I think they're all going to ultimately need uh defragmenting the liquidity and so this is yeah again where spark sits is boosting these stable coins liquidity with all the others and really sitting as a hub for them to be able to have institutional swaps so yeah like so something that's kind of missing right now uh is that there is stable coins used for uh payments in the offshore i think this is tether's a big use case but we don't really see it for uh payments uh coming in like for onshore uh stable coins yet But I think that's going to change and AI agents will help here just because a lot of the fees and frictions that exist in the banking system, settlement is extremely slow.
It doesn't operate on weekends.
People have to hold balances to facilitate cross-border remittance, this type of stuff.
The international banking system is like a very janky system and extremely out of date.
Once you eliminate all that, this is the compelling use case for stablecoin payments.
And we see it.
you know, not only like on the consumer side, but institutions.
You know, I'm having conversations with major institutions where like, you know, I was spending, you know, hundreds of thousands of dollars a day paying wire payment fees.
And then I switched to stable coins and all that goes away.
So these are the optimizations that even exist for institutions.
And then that's the initial piece.
We need to get them using stable coins.
And there is a natural economic driver to do that.
And then once everybody's using stable coins, all the utility attached to that.
just sort of compounds with the liquidity coming on chain.
Okay, yeah, that makes a lot of sense.
And that vision of the future, I think, is coming quickly.
Sam, I know we're getting close to time here, but I want to ask you just a quick question about the Spark token, the SPK token, where that sits in this ecosystem, and then relate that to me, or for me, to Sky and the Sky token.
Because I think this gets confusing for a lot of people who even are native DeFi users.
Talk to me about the relationships between these tokens.
what roles they play in the ecosystem and just what an audience should know about these things.
Right.
So these entities are related, but these are separate businesses.
As I mentioned before, you can think of it, I want to say these things are not banks, but I think it's a very useful analogy.
You have Sky as a central bank.
And so there's a certain, they'll earn, you know, NIM on their deposits versus lending out to the sub-DAOs.
And Spark has its own business line.
So we're generating our own money.
We have our own treasury.
The protocol has been profitable nonstop pretty much, even during the most bearish periods, we are able to maintain profitability, growing the treasury.
And so as the protocol increases its revenue, its different business lines, grows its revenue, this goes into the Spark treasury and excess capital beyond that is returned to SPK holders in the form of, currently it's a buyback, but we will move more towards like buyback burn, buyback distribute.
So that it's naturally sort of the incentives are all aligned for SPK being belief in sort of the growth of Spark as a protocol.
Gotcha.
Okay, that's helpful.
Yeah, I had Jeff Kendrick from Standard Charter on the show a couple weeks ago, and he referred to Sky as the federal bank of DeFi.
And I think that that...
helpful distinction of federal commercial banking it can help people sort these things out in their minds um sam this has been really helpful i appreciate you coming on milk or crypto and sharing your thoughts on all of these things um before i let you go is bitcoin over or under 100k by the end of the year okay oh let's go all right i'm gonna hold you to that uh sam thank you so much for being on milk or crypto i learned a lot from this i'm really glad we could get you on to talk where can we send people to find more of you and your work online yeah so uh you can i'm on twitter x hexanod I'm also on LinkedIn.
There's the website, spark.finance.
You can get all the information there.
One question.
Hexanot's not related to HexChain at all, is it?
No, no, no.
Actually, I got that.
Some people will get confused with that sometimes back in the day, but I see a lot less HexChatter these days.
Yeah.
No relation.
Oh, God, I just wanted to clarify that.
Yeah, some things have changed for the Hexacons RIP.
All right, Sam, I'll end it there.
Thank you so much for being on Milcro Crypto.
I hope we can catch up again soon, but thanks for being here and sharing your wisdom with our audience.
Yeah, thanks for having me.
And thank you all for joining us.
I hope you all learned something today.
This was a fun one.
So until next time, stay safe, stay educated, stay bullish, and we will see you all in the next episode of Milcro Crypto.
Thanks for being here, everyone.
Bye.
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