Avalon Finance

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Avalon Finance

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Avalon Finance

Avalon Finance is a Bitcoin-centric financial platform that combines and elements to provide lending solutions and services. The platform aims to build an on-chain capital market for , bridging traditional financial systems with technology. As of mid-2025, the platform serviced over 20,000 Bitcoins for more than 300,000 active users, with a (TVL) exceeding $500 million. [1] [6]

Overview

Avalon Labs aims to create an on-chain financial center focused on , bridging with traditional financial services. Its mission is to transform from a passive store of value into a dynamic financial asset, thereby driving real-world adoption and utility. The platform offers various solutions, such as -backed lending, a -backed (USDa), yield-generating accounts, and a credit card, designed to enable holders to utilize their assets in a dynamic financial ecosystem. [2] [6]

Avalon Labs is built around four main components: CDP USDa, a yield-bearing collateralized debt position (CDP) backed by that allows generation while earning yield; USDaLend, a lending protocol using -backed stablecoins; Lending, a protocol connecting with to enhance scalability and liquidity; and Decentralized Lending, which features an isolation pool mechanism for secure lending with Derivatives (). [2]

Related Topics

History

Avalon Finance was part of Season 8 of the Most Valuable Builder (MVB) program, an incubation initiative co-led by , , and . This participation helped accelerate its growth and visibility within the DeFi ecosystem. [6]

In February 2025, Avalon Labs announced it was exploring the creation of a -backed public debt fund. The company began assessing the potential of using the U.S. Securities and Exchange Commission's (SEC) Regulation A exemption, often called a "mini-IPO," to offer regulated -backed debt products to both accredited and non-accredited retail investors. This initiative is part of Avalon's broader to expand its lending operations into traditional financial markets within a compliant framework. [7]

In June 2025, YZi Labs announced a strategic investment in Avalon Labs. The new capital was earmarked for pursuing regulatory compliance multiple jurisdictions, securing necessary licenses, and accelerating the growth of its institutional lending business, with the goal of becoming a fully regulated on-chain financial institution. [6]

Technology and Mechanism

Avalon Finance is built on the , a solution for , to its scalability, speed, and security. processes transactions off-chain before settling them on the , enabling Avalon to handle high transaction volumes with faster confirmation times and lower fees. This architecture ensures a smooth user experience while retaining the security of the underlying network. [8]

Interest Rate Mechanism

The platform employs a dynamic interest rate mechanism that adjusts based on supply and demand within each lending pool. Interest rates are not static; they fluctuate in real-time based on the pool's utilization ratio. When the supply of an asset is high, lending rates decrease to incentivize borrowing. Conversely, when borrowing demand is high and an asset becomes scarce, lending rates increase to encourage more deposits and maintain liquidity. This model ensures an efficient and balanced marketplace for lenders and borrowers. [8]

Products

CeDeFi CDP USDa

USDa is a -backed collateralized debt position (CDP) that offers unique features for holders and users. It is described as the world's largest issuer of Bitcoin-backed stablecoins and ranked as the second-largest CDP on in 2025. It introduces a fixed borrowing rate system for predictable capital costs, allowing for better financial planning, and provides a 1:1 conversion to , offering protection against volatility. USDa's supply is unlimited, ensuring continuous scalability, and it is omnichain compatible through , enabling interaction multiple . Additionally, users can USDa to earn sustainable yield, with the platform ensuring high capital efficiency and . [9] [10] [6]

sUSDa

is the yield-bearing version of Avalon's USDa . Users can obtain sUSDa by depositing USDa into the Avalon Savings Account or vault. The sUSDa token accrues yield, which is generated from USDa borrowing rates and revenues from Avalon's lending platform. This mechanism allows USDa holders to earn passive income on their holdings, with yields potentially reaching around 15% APY. The system is designed to incentivize a ratio under 50% to maintain sustainable double-digit APRs. [14] [15]

CeDeFi Lending

Avalon's lending protocol combines and elements to offer a borrowing platform for retail and institutional users. It features fixed borrowing rates for stablecoins like and , real-time on-chain transparency, and minimized during through a proprietary trading algorithm. The protocol integrates with DeFi platforms and leverages institutional capital to maintain and reduce borrowing costs. A key feature is its use of independent, regulated custodians, ensuring that Avalon never takes custody of user assets. The platform also employs a client-aligned policy with safeguards to help users manage positions before they are at risk of . [11] [1]

DeFi Lending

Avalon's lending protocol is the largest decentralized liquidity protocol for tokens and other derivatives. It supports borrowing and lending for and Staked Derivatives (LSDs), using isolated lending pools to enhance capital efficiency and reduce risk exposure. The platform provides deep and over $1 billion in assets and operates multiple , including , , and , enabling access to a broad range of users and ecosystems. [12] [1]

Isolated Lending Pools

Avalon’s isolated lending pools enhance capital efficiency and reduce risk by separating asset classes into pools with customized parameters. This structure prevents a price crash in one asset from affecting the stability of other pools. [12]

The pools include:

  • Main Pool: This pool supports assets with prices and high resistance to manipulation, such as major .
  • Innovation Pool: This pool is for newer, more volatile crypto assets that offer higher potential returns but also carry greater risks.
  • RWA Lending Pool: This pool is designed for permissioned and (RWA) tokens, including money market funds, equity indexes, and corporate bonds, paired with .
  • BTC LSD Pool: This pool handles individual Derivatives alongside , adjusting risk settings based on asset volatility.

Each pool is managed with asset-specific Loan-to-Value and thresholds to maintain stability and minimize exposure. [8]

Super Earn

Super Earn is a product designed to offer enhanced yields on stablecoins and . It provides various strategies tailored to different risk appetites. For USDT, options range from conservative, principal-protected strategies based on funding and DeFi yield (5-10% APY) to growth-oriented strategies using cross-exchange (10-50% APY). For BTC, strategies include a conservative DeFi yield option (2% APY), a balanced approach using BTC-backed loans (5-10% APY), and a structured option with a capped max downside of 5% (15% APY). An AI-driven RWA yield product was also planned. [1]

AVL

AVL is Avalon’s , introduced to give the community a direct role in shaping its -backed financial ecosystem. Holders of staked AVL (sAVL) can vote on major protocol decisions, influencing the platform’s development and . Beyond governance, AVL unlocks benefits like fee rebates, access to AVL Lend, and exclusive incentives. With 90% of the token supply allocated to the community and just 10% to the team, AVL reinforces Avalon’s commitment to a decentralized, user-driven model. [3] [10]

Tokenomics

AVL has a total supply of 1B tokens and has the following distribution: [4]

  • Community Incentive: 28%
  • Airdrop: 20%
  • Investors: 19%
  • Ecosystem & Treasury: 15%
  • Team: 10%
  • Advisor: 4%
  • Initial Liquidity: 4%

sAVL

sAVL is the staked form of AVL, designed to reward long-term participation and deepen alignment between users and Avalon Labs. AVL into sAVL enables holders to earn AVL rewards, access governance rights, and influence the allocation of token emissions various pools. A bribing market supports additional yield generation for sAVL holders. Users also receive fee rebates on Avalon products like USDa and Lending, with benefits increasing based on the amount staked. sAVL reinforces long-term engagement by tying incentives to Avalon’s sustained growth. [5]

Backers and Partnerships

Avalon Finance is backed by several notable investors and partners in the space, including and DOMO, the creator of the standard. [1] [6]

The platform has established partnerships with a wide range of projects and blockchains to enhance its ecosystem and interoperability. Key partners include:

These collaborations support Avalon's multi-chain presence and integration with various DeFi protocols and infrastructure providers. [13]

REFERENCES

[1]
www.avalonfinance.xyz

Official website

Apr 11, 2025

[2]
docs.avalonfinance.xyz

Documentation

Apr 11, 2025

[3]
docs.avalonfinance.xyz

AVL introduction

Apr 11, 2025

[4]
docs.avalonfinance.xyz

AVL tokenomics

Apr 11, 2025

[5]
docs.avalonfinance.xyz

AVL staking

Apr 11, 2025

[6]
www.yzilabs.com

YZi Labs Investment Announcement

Oct 22, 2025

[7]
cointelegraph.com

Cointelegraph Press Release

Oct 22, 2025

[8]
www.gate.com

Avalon Finance on Gate Learn

Oct 22, 2025

[9]
docs.avalonfinance.xyz

USDA documentation

Oct 22, 2025

[10]
medium.com

USDA introduction

Oct 22, 2025

[11]
docs.avalonfinance.xyz

CeDeFi lending documentation

Oct 22, 2025

[12]
docs.avalonfinance.xyz

DeFi lending documentation

Oct 22, 2025

[13]
tokenterminal.com

Token Terminal Overview

Oct 22, 2025

[14]
nibiru.fi

Avalon USDa and sUSDa on Nibiru Docs

Oct 22, 2025

[15]
decrypt.co

Decrypt Press Release

Oct 22, 2025

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