Avalon Labs has formally introduced the institutional yield layer on Bybit Earn; it’s a new model for lending Bitcoin and generating yield that combines centralized finance efficiency with decentralized finance innovation. Bybit Earn is a yield product offered by Bybit, a centralized exchange (CEX) for trading cryptocurrencies such as Bitcoin. Bybit Earn, as an offering, is more like a savings account than a fixed-income product in terms of how one would expect it to work, and that’s intrinsic to the new model Avalon Labs has built. The new initiative centers on using Avalon’s fixed-rate institutional borrowing infrastructure and integrating FunctionBTC ($FBTC), a version of Bitcoin fully compatible with DeFi protocols and pegged to Bitcoin. This combination allows Bitcoin to become a productive, yield-generating asset without exposing users to the direct dynamics of DeFi, which can be both complex and volatile. Unlocking Yield Through CeFi-to-DeFi Bridging At the core of this system is $FBTC, a pegged Bitcoin asset that holds a 1:1 value with Bitcoin. Holding over $1.25 billion in total value locked (TVL), $FBTC forms a solid bridge, bringing Bitcoin into DeFi across Ethereum and other compatible blockchains. It lets users access DeFi protocols and yield strategies while keeping the economic exposure of Bitcoin. In this innovative structure, Avalon serves as the intermediary that transforms passive Bitcoin into an active yield-generating instrument. It all starts with $FBTC deposited as collateral on Avalon’s institutional platform. Next, Avalon lends against the $FBTC at fixed interest rates. This setup offers predictability and transparency to both borrowers and lenders. The capital that is borrowed—denominated in USDT—gets put to work in high-yield strategies, using yield-bearing synthetic assets like $USDe and $sUSDE, which Ethena Labs issues. These DeFi-native assets are designed to hold their value and pay off consistently, making them ideal for Avalon to construct strategies around. The here is not just in the technology but in the structure of the ecosystem. The entire yield cycle—from collateralization to deployment and eventual yield distribution—is automated and optimized. This means that users can access the benefits of institutional-grade yield farming without the complexities or risks typically associated with DeFi involvement. Making Bitcoin Work Harder This new layer is more than just a new application of blockchain technology; it’s a move toward reinventing Bitcoin’s role in the financial system. Traditionally regarded as a secure way to hold wealth, Bitcoin has until now mostly sat still, with holders hoping for it just to get more valuable. Avalon isn’t just offering a new way to earn that kind of passive income; its model is even more radical because it reinterprets the underlying financial instrument. Avalon enables retail users to access institutional-grade strategies when they integrate with Bybit Earn. This was something only within the reach of the privileged few before. But now, the vast majority can access these kinds of strategies. And there are two things in particular about the way that Avalon works that I want to highlight. One is that the yield is fixed. This is really important because more and more in the crypto space, we are seeing products that have variable yields. Yielding a variable amount is a really good way of saying we might not be able to service our debt. But when you see a product with a fixed yield, it is very clear that particular product is hitting some sort of threshold for servicing its debts. Avalon’s multilayered model also stresses security and simplicity. The whole process is set up to bypass the kinds of overleveraging and murky risk-taking that some DeFi lending platforms have previously dragged us into. By using overcollateralized positions and directing capital only into kinds of high-grade, yield-bearing assets, Avalon guarantees that the yield mechanism remains intact. This partnership has established a bridge between CeFi and DeFi, and it has created a way for users of a Bitcoin-native platform to generate yield on their digital assets. As soon as next month (March 2023), users on BlockFi’s platform will be able to stake their Bitcoin and earn Bitcoin yields, all while the assets remain in a fully collateralized state. This clean structure—a wall between Bitcoin and Ethereum and between BlockFi and the Staking Ethereum-using platform—could make the BlockFi-to-Ethereum staking operation a possible model for CeFi-to-DeFi collaborations in the future. Avalon’s institutional layer on Bybit Earn is now launched, and it is a watershed moment for crypto finance. This system is using the best of both centralized and decentralized worlds, and it is yielding something that looks quite nice for Bitcoin holders. The basic premise—layered on top of Bybit’s existing centralized finance (CeFi) structure—is that there are now two main ways for these holders to earn yields: either by putting their BTC in a custodial solution where it’s safe and sound (but with the risk of it being too accessible to hackers), or by allowing their BTC to be used in a revolutionary new way that more closely aligns with the Bitcoin ethos. Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services. Follow us on Twitter @nulltxnews to stay updated with the latest Crypto, NFT, AI, Cybersecurity, Distributed Computing, and Metaverse news !
https://www.digistore24.com/redir/325658/ceobig/
