[Ethereum] Spark Liquidity Layer - Onboard with Paxos - January 19, 2026

Spark's Operational Facilitator has placed a proposal into the voting system on behalf of nested contributor Phoenix Labs.

Review

The Spark community can hereby express support or opposition to the following changes, as described by the author of the proposal:

We propose to onboard with Paxos to allow Spark Liquidity Layer the ability to directly swap between Paxos issued stablecoins or mint and redeem in exchange for USDC. Paxos currently will not charge a fee for this service, meaning any exchanges between PYUSD and USDG are free. Because Circle charges a redemption fee for burning USDC, which is passed on, minting PYUSD with USDC will incur some level of cost, meaning that it may be more efficient to purchase PYUSD on the secondary market. However, having the capability to mint PYUSD remains useful as a backup option.

In practice, the Paxos account allows for generating unique deposit addresses where a particular stablecoin being received will automatically be exchanged for another target stablecoin. For each transferAsset rate limit described below, the output stablecoin is defined in parentheses. Rate limits are set based on expected usage and maximum throughput demanded in stressed conditions, with generally higher rate limits for moving from Paxos issued stables into USDC vs the other direction. For exchanges between PYUSD and USDG, or from PYUSD to USDC, there is no fee so the value at risk is largely limited to opportunity cost (we discount solvency risk of these stables as they are all regulated and backed solely by cash equivalents). Costs from faulty swaps from USDT to PYUSD are expected to incur costs of not more than 0.15% in the worst case.

Parameter summary:

• USDC transferAsset (purchasing PYUSD)
  • address: to be provided before voting
  • maxAmount: 5 million
  • slope: 50 million
• PYUSD transferAsset (purchasing USDC)
  • address: to be provided before voting
  • maxAmount: 5 million
  • slope: 200 million
• PYUSD transferAsset (purchasing USDG)
  • address: to be provided before voting
  • maxAmount: 5 million
  • slope: 50 million
• USDG transferAsset (purchasing PYUSD)
  • address: to be provided before voting
  • maxAmount: 5 million
  • slope: 100 million

The proposed Spark Artifact changes can be found in the following pull request: https://github.com/sky-ecosystem/next-gen-atlas/pull/165

Outcomes

• If "For" receives the most votes, the proposal will be approved. The associated pull request will be merged into Spark's artifact. When required, the listed changes will proceed to implementation by the relevant actors.
• If "Against" receives the most votes, the proposal will be rejected. No changes will be implemented.