Funding Background

Funding Background (Source: https://www.rootdata.com/Projects/detail/Avalon%20Labs?k=MTE5MDE%3D)

Avalon Labs has announced two rounds of funding. The first was a seed round on March 15, 2024, with the amount undisclosed, and it was participated in by SNZ Holding, Spark Digital Capital, Matrixport Ventures, and others. The second was an A-round funding on December 23, 2024, with $10M, led by Framework Ventures, with participation from Kenetic Capital, SNZ Holding, UTXO Management, and others.

Team Members

According to RootData, the Chief Services Officer of Avalon Labs is listed as 0xVE, but no further team information has been disclosed.

Core Functions

Core Functions

Avalon’s core functions are primarily composed of three business areas: BTC-backed yield-bearing debt positions (USDa), stablecoin lending (USDLend), and DeFi lending.

Avalon Labs TVL

According to DeFiLlama, as of February 13, 2025, the total value locked (TVL) in the Avalon protocol has reached $1.775B. The TVL of USDa is $520.59M, USDLend is $0.65M, and DeFi lending is $1.123B. [3]

1. USDa

The world’s first BTC-backed yield-bearing collateralized debt position (CDP), integrated into Avalon’s CeDeFi lending infrastructure. This allows users to leverage their Bitcoin holdings to generate stablecoins while earning yields.

USDa is the world’s first and largest Bitcoin-collateralized debt position and serves as the flagship product of Avalon’s innovative CeDeFi lending platform. It is designed to provide the ultimate stablecoin solution for Bitcoin holders and DeFi users. USDa offers unparalleled capital efficiency, stability, and deep liquidity from the BTC ecosystem, aiming to become the preferred stablecoin for users seeking reliability and scalability in DeFi activities.

1. USDa Features

• Fixed Lending Rate

USDa introduces a groundbreaking fixed lending rate system, the first of its kind in DeFi, inherited from Avalon’s CeDeFi lending platform. This unique feature provides users with predictable capital costs, enabling them to easily forecast on-chain activity returns, enhance financial planning, and offer transparency.

• Sustainable Yield

To earn sustainable returns, USDa holders can stake their assets in Avalon’s yield-generating pools. These returns are supported by USDa’s lending rates and the revenue generated through USDaLend, ensuring long-term scalability and stability for users.

• 1:1 Conversion to USDT

Unlike traditional CDPs, USDa’s innovative feature allows users to convert USDa to USDT on a 1:1 basis, ensuring a stable peg. This mechanism offers stability and protection against market volatility, eliminating the risks associated with de-pegging. USDa acts as a loan token in Avalon’s CeDeFi lending infrastructure, allowing users to withdraw USDT from our CeFi liquidity providers directly.

• Unlimited Supply

USDa is the only stablecoin with no supply limit, allowing for flexible scaling based on demand. Unlike other CDP-based stablecoins, which struggle to maintain their peg due to supply limitations, USDa ensures continuous liquidity and stability without facing these constraints. While USDa adopts an unlimited supply model, its 1:1 peg advantage on Avalon’s CeDeFi lending platform ensures stability. This also aligns with Avalon Labs’ deep collaboration with institutional capital.

• Full Chain Compatibility

USDa, powered by LayerZero, is a full-chain stablecoin that provides seamless access across multiple DeFi ecosystems. This cross-chain compatibility allows users to interact easily with USDa across various blockchains without restrictions.

• Maximized Capital Efficiency

Avalon’s DeFi platform enables USDa to reach a growing user base of over 200,000. USDa features an independent pool designed to maximize capital efficiency and minimize risk, offering one of the most efficient and secure stablecoin solutions.

2. How to Use USDa

How to Obtain USDa

Purchase USDa and sUSDa

Users can easily purchase USDa and sUSDa directly from supported decentralized exchanges (DEXs).

Mint USDa

There are two ways to mint USDa through Avalon’s CeDeFi CDP:

• Mint USDa with Collateral: Users can deposit collateral into Avalon CeDeFi. Currently, collateral options include FBTC, with plans to expand to more assets soon. After depositing collateral, users can apply for a USDa loan. The amount of USDa available for borrowing is determined by the loan-to-value (LTV) ratio based on the collateral type. As long as users maintain the required LTV, they can flexibly borrow multiple times.
• Mint USDa with USDT: Users can deposit USDT into Avalon CeDeFi and receive USDa on a 1:1 basis.

The process is similar to Avalon’s CeDeFi lending, as the CeDeFi CDP and lending share the same technology and fund flows.

Withdrawal Process

To withdraw collateral from CeDeFi Lending, users should follow these steps:

• Initiate Withdrawal: Users initiate a withdrawal request for the collateral, ensuring that the withdrawal amount meets the LTV requirement. If users wish to withdraw all collateral, they must first repay the full borrowed amount, including both principal and interest.
• Receive Collateral: Users can receive their collateral within one business day after initiating the withdrawal request.

Repayment Process

Users can repay any amount, up to the total loan amount, including principal and interest, to repay a USDa loan.

USDT Conversion Process

A unique feature of USDa is its guarantee to be converted to USDT on a 1:1 basis. To convert USDa to USDT, users must bridge their USDa to the Ethereum mainnet and deposit it into the conversion pool. Users will be able to receive their USDT within one business day.

Liquidation Process

If the loan-to-value (LTV) exceeds the liquidation threshold, part of the collateral will be liquidated to bring the LTV back to the target level. During liquidation, the underlying collateral will be sold on centralized exchanges using Avalon’s proprietary high-frequency trading algorithms to minimize market price impact.

Integration with DeFi

USDa Utility

USDa is a full-chain stablecoin with DeFi composability, and it will be integrated into Avalon Labs’ DeFi lending. Separate pools will be set up for different types of collateral to borrow USDa at stable lending rates.

2. USDLend

Avalon’s CeDeFi lending protocol seamlessly and efficiently bridges the gap between DeFi and CeFi institutions, revolutionizing stablecoin lending. It is the first on-chain lending platform that simultaneously serves institutional and retail clients with predictable costs.

1. Features of USDLend

• Fixed Lending Rate

Avalon provides the first on-chain stable and fixed lending rates for stablecoins such as USDT and USDC, typically ranging from 8% to 10%. This allows users to accurately manage interest costs, ensuring financial predictability and peace of mind.

• Minimal Liquidity Impact

Avalon utilizes proprietary high-frequency trading algorithms to minimize slippage during collateral liquidation, ensuring client assets are protected and market impact is minimal.

• Access to Institutional Capital Supply

Avalon has secured access to billions of dollars in institutional balance sheets, offering a robust and sustainable capital supply. This unique advantage ensures Avalon users can access stablecoin liquidity at the lowest borrowing costs, lowering the overall capital cost for the entire DeFi ecosystem. By leveraging institutional liquidity, Avalon enhances its platform and helps reduce financial barriers in the decentralized finance sector.

• Transparent Operations

With real-time on-chain transparency, Avalon ensures complete visibility of lending and custodial activities, enhancing trust and accountability within the platform.

• Seamless Integration with DeFi

Avalon easily integrates with leading DeFi protocols, boosting interoperability and creating a unified decentralized finance ecosystem.

In summary, Avalon combines the strengths of CeFi and DeFi, offering a stable, transparent, and highly reliable lending platform, positioning itself as a leader in the future of decentralized finance.

2. Usage Process

Lending Process

Borrowing from Avalon’s CeDeFi lending platform is simple, secure, and flexible. Here is a step-by-step guide to the process:

• Providing Collateral: To begin borrowing, users must deposit collateral into Avalon CeDeFi. Currently, the supported collateral option includes FBTC, with plans to expand to other assets soon.
• Applying for a Loan: After depositing collateral, users can apply for a stablecoin loan. The available loan amount is determined by the Loan-to-Value (LTV) ratio, depending on the type of collateral provided. Users can borrow multiple times as long as the required LTV is met.

Receiving the Loan: Once approved, users can receive their USDT loan, typically within 1-2 business days.

Withdrawal Process

To withdraw collateral from Avalon CeDeFi, users should follow these steps:

• Initiate Withdrawal: Users initiate a request to withdraw their collateral. The amount of collateral withdrawn must comply with LTV requirements. Users must first repay the total loan amount, including principal and interest, if they wish to withdraw all their collateral.
• Receiving Collateral: After initiating the withdrawal request, users can receive their collateral within 1-2 business days.

Repayment Process

Users can repay any amount of their stablecoin loan, up to the full loan amount, including principal and interest. Repayments can be made anytime during the loan term, offering flexibility to borrowers.

Liquidation Process

If the Loan-to-Value (LTV) ratio exceeds the liquidation threshold, a portion of the collateral will be liquidated to bring the LTV back to a safe level. The liquidation process is carried out using Avalon’s proprietary high-frequency trading algorithm, ensuring minimal impact on market prices.

3. DeFi Lending

Avalon’s DeFi lending protocol offers cutting-edge lending solutions for BTC and BTC Liquid Staking Derivatives (LSD), making it one of the most advanced platforms in the space.

1. Features of DeFi Lending

• Isolated Pool Mechanism

Avalon utilizes independent lending pools for different BTC LSD tokens, maximizing capital efficiency while minimizing risk. This ensures that each asset class operates independently, protecting users from broader market fluctuations.

• Deep Liquidity

As the largest lending protocol focused on BTC-related lending, Avalon has accumulated over $1 billion in assets, providing unparalleled liquidity for its users.

• Multi-Chain Deployment

Avalon is deployed across multiple blockchains, including Arbitrum, BNB Chain, Bitlayer, CoreDAO, Ethereum, and Merlin. We plan to expand to additional blockchains to ensure our platform supports various communities and ecosystems.

In summary, Avalon provides the most efficient and reliable lending solutions for BTC and BTC LSD tokens, combining innovation and scalability to deliver the best DeFi lending experience.

2. Isolated Lending Pool Mechanism

Avalon’s isolated lending pools are designed to optimize capital efficiency while minimizing liquidity and market risks. This unique approach ensures users can participate in lending with high security and flexibility.

Avalon operates three different types of lending pools, each tailored to asset composition:

• BTC LSD Pool

Each BTC LSD token has its own independent pool. This pool contains at least BTC LSD tokens and BTC. Stablecoins may also be included, depending on the on-chain liquidity of the specific BTC LSD token. The Loan-to-Value (LTV) ratio and liquidation parameters are adjusted to reflect the unique price risks of these assets.

• RWA Lending Pool

Each Real-World Asset (RWA) token has its own dedicated pool. These pools contain RWA tokens and stablecoins, focusing on yield-generating RWAs with price stability and strong on-chain liquidity. LTV and liquidation parameters are optimized based on these tokens’ price risks.

• General Pool

This pool includes major assets such as BTC, ETH, and stablecoins, providing diversified lending opportunities for multiple popular assets.

Avalon’s isolated pool structure ensures that each asset class is managed with customized risk parameters, maximizing participant security and efficiency.

3. Liquidation

Liquidation occurs when a borrower’s health factor falls below 1, indicating that their collateral value is no longer sufficient to cover the debt. This can happen due to a decline in collateral value or an increase in borrowed debt. The health factor represents the ratio of collateral to debt, and if it drops too low, the loan may be liquidated.

Up to 50% of the borrower’s debt can be repaid during liquidation, with the corresponding amount and a liquidation fee deducted from the borrower’s collateral. After liquidation, the debt repayment amount is covered by the liquidated collateral.

4. Tokenomics

Avalon Labs is redefining the Bitcoin-backed financial landscape. Starting as the world’s largest Bitcoin-backed CDP issuer, Avalon has continuously innovated to build a dynamic Bitcoin-centric financial ecosystem. Beginning with lending, Avalon has expanded its product suite to include DeFi lending, a CeDeFi fixed-rate model, and, most recently, a stablecoin. Community demand has always driven this strategic evolution, positioning Avalon at the heart of next-generation on-chain finance. Now, with the launch of AVL, we are taking community-driven governance to new heights, empowering users to actively shape Avalon’s future.

1. $AVL Token Information

The $AVL token’s mainnet contract address is 0x5c8d0c48810fd37a0a824d074ee290e64f7a8fa2. In addition to the mainnet, $AVL is also available on BSC and Merlin. As of February 13, the current market capitalization of $AVL is $49.23M, with a fully diluted valuation (FDV) of $53.74M.

2. $AVL Token Distribution and Unlocking

$AVL Token Distribution

The distribution and unlocking details of the $AVL token are as follows:

• Community Incentives: 28%, with 5% unlocked at TGE, followed by a 3-month cliff period, and then linear vesting over 48 months;
• Airdrop: 20%, with 50% unlocked at TGE, and the remaining 50% unlocked after 6 months;
• Ecosystem and Treasury: 16%, with 5% unlocked at TGE, followed by a 3-month cliff period, and then linear vesting over 48 months;
• Team: 10%, with an 18-month cliff period, followed by linear vesting over 18 months;
• Advisors: 4%, with a 12-month cliff period, followed by linear vesting over 12 months;
• Initial Liquidity: 4%, with 75% unlocked at TGE, and the remaining 25% vesting linearly over 3 months;
• Investors: 18%, with a 12-month cliff period, followed by linear vesting over 12 months.

3. $AVL Token Utility

By staking AVL as sAVL, holders will receive AVL rewards, ensuring that Avalon’s growth is directly tied to the interests of its long-term investors. This reward mechanism incentivizes continuous support and active participation in the ecosystem. sAVL holders have the right to decide Avalon’s future. From determining new products and features to adjusting key protocol parameters, your stake empowers you to guide Avalon Labs’ direction. As a sAVL holder, you can vote on how to allocate the AVL issuance to various pools. A bribery market will be established to create real returns for sAVL holders, giving you better control over your rewards and participation. You can enjoy exclusive fee rebates when using Avalon’s USDa and CeDeFi lending platform. The more AVL you stake, the lower your borrowing costs, making it an attractive way to enhance your DeFi experience and support Avalon’s growth.

Recent Updates

$AVL Listed on Gate

Avalon Labs’ token $AVL was officially listed on the Gate exchange on February 12 [5]. Shortly after, the U-based contract was also launched on Gate. The Gate spot trading link is: https://www.gate.io/zh/trade/AVL_USDT

Conclusion

Compared to simple lending protocols, Avalon has developed a DeFi ecosystem based on USDa, including stablecoin and DeFi lending. However, from the perspective of DeFi lending protocols alone, Avalon has already become the largest lending protocol in the BTC ecosystem. By taking a unique approach and focusing on the BTC ecosystem, Avalon helps develop the Bitcoin DeFi ecosystem by introducing both on-chain and off-chain liquidity. This gives Avalon Labs significant growth potential in terms of ecosystem market value.