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Editorial policyAvalon Finance centers on Bitcoin and blends DeFi and CeFi lending with its native AVL token. It aims to connect on-chain finance with traditional markets, enabling Bitcoin to function as an active financial asset.
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Avalon Finance centers on Bitcoin and blends DeFi and CeFi lending with its native AVL token. It aims to connect on-chain finance with traditional markets, enabling Bitcoin to function as an active financial asset.
Avalon Labs seeks to establish an on-chain financial hub centered on Bitcoin, bridging decentralized finance (DeFi) with conventional financial services. Its goal is to convert Bitcoin from a passive store of value into an active financial asset, expanding real-world use and utility.
The platform features Bitcoin-backed lending, a Bitcoin-backed stablecoin (USDa), yield-generating accounts, and a credit card, all designed to let Bitcoin holders deploy their assets within a dynamic ecosystem.
Avalon Labs is built around four core pillars: a Bitcoin-backed CeDeFi CDP USDa, a yield-generating collateralized debt position backed by BTC; USDaLend, a lending protocol using Bitcoin-backed stablecoins; CeDeFi Lending, a hybrid protocol linking DeFi with CeFi liquidity providers to boost scalability and liquidity; and Decentralized Lending, which uses an isolation pool mechanism for secure lending with Bitcoin Liquid Staking Derivatives (LSDFi).
Avalon Finance participated in Season 8 of the Most Valuable Builder (MVB) program, an incubator co-led by BNB Chain, YZi Labs, and CoinMarketCap, which helped accelerate its growth and visibility in the Bitcoin DeFi ecosystem.
In February 2025, Avalon Labs disclosed explorations of a Bitcoin-backed public debt fund, evaluating the use of the U.S. Securities and Exchange Commission's Regulation A exemption (a so-called mini-IPO) to offer regulated Bitcoin-backed debt products to both accredited and non-accredited retail investors as part of expanding lending into traditional markets within a compliant framework.
In June 2025, YZi Labs announced a strategic investment in Avalon Labs, with capital designated for regulatory compliance across several jurisdictions, license procurement, and accelerated growth of its institutional lending business toward becoming a fully regulated on-chain Bitcoin financial institution.
Avalon Finance operates on the Merlin Chain, a Layer 2 solution for Bitcoin that enhances scalability, speed, and security. Merlin Chain processes transactions off-chain before final settlement on the Bitcoin blockchain, enabling high throughput, quicker confirmations, and reduced fees while preserving Bitcoin's security.
Interest Rate Mechanism
The platform uses a dynamic interest-rate model that shifts with supply and demand in each lending pool. Rates are real-time and vary with pool utilization: abundant supply lowers borrowing costs to stimulate lending, while tight liquidity and higher borrowing demand raise rates to attract deposits and maintain balance.
CeDeFi CDP USDa
USDa is a Bitcoin-backed collateralized debt position (CDP) stablecoin that has been described as the world's largest issuer of Bitcoin-backed stablecoins and ranked as the second-largest CDP on DeFiLlama in 2025. It uses a fixed borrowing rate for predictable costs, maintains a 1:1 peg with USDT to mitigate volatility, offers unlimited supply for ongoing scalability, and supports omnichain interaction via LayerZero. Users can stake USDa to earn yield, with the system aiming for high capital efficiency and liquidity.
sUSDa
sUSDa is the yield-bearing variant of USDa. Holders can mint it by depositing USDa into the Avalon Savings Account or vault. The sUSDa token accrues yield generated from USDa borrowing rates and platform loan revenues, potentially delivering around 15% APY. The design encourages a staking ratio below 50% to sustain double-digit APRs.
CeDeFi Lending
AVL is Avalon’s governance token, enabling the community to participate in shaping Bitcoin-backed financial mechanisms. Holders of staked AVL (sAVL) can vote on key protocol decisions, access fee rebates, use AVL Lend, and receive exclusive incentives. The distribution allocates 90% of the supply to the community and 10% to the team.
Tokenomics
AVL has a total supply of 1B tokens and the following distribution:
sAVL
sAVL is the staked variant of AVL, crafted to reward long-term participation and align user interests with Avalon Labs. Staking for sAVL yields AVL rewards, grants governance rights, and influences emission allocations across pools. A bribing market supports extra yield for sAVL holders, and users receive fee rebates on USDa and CeDeFi Lending, with benefits rising as stake size increases. sAVL reinforces commitment to Avalon’s ongoing growth.
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