Bybit integrates Avalon through CeFi to DeFi bridge for Bitcoin yield

Crypto alternate Bybit has partnered with lending protocol Avalon to supply Bitcoin yield to its customers.

In accordance to an April 14 Avalon Labs X announcement, the centralized decentralized finance (CeDeFi) protocol will now be part of the alternate’s yield product, Bybit Earn. Avalon mentioned it’ll permit the platform’s customers to earn yield from Bitcoin (BTC) by arbitrating on its fixed-rate institutional borrowing layer.

Avalon Labs announced in March that it raised a minimal of $2 billion price of credit score with doable scaling as the necessity arises. The product permits institutional debtors to entry USDt (USDT) liquidity with out liquidating their Bitcoin holdings at a set 8% borrowing price.

In February, Avalon Labs additionally introduced it was contemplating issuing a Bitcoin-backed debt-focused public fund. Venus Li, co-founder of Avalon Labs, mentioned on the time that the fund might be issued by leveraging a Regulation A US securities exception:

“We’ve got spent years researching how Regulation A has been utilized in conventional finance and whether or not it might be a viable path for crypto firms. Whereas profitable precedents within the crypto trade are restricted, our evaluation of earlier SEC-approved circumstances suggests a viable path ahead.”

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Centralized and decentralized finance unite

Avalon Labs’ product is a CeDeFi protocol, someplace between decentralized finance (DeFi) and centralized finance (CeFi). This product class — with elevated management over capital flows and entry — usually has benefits in assembly regulatory necessities for integrating with CeFi platforms.

The Bybit Earn integration leverages Avalon Labs’ 1:1 Bitcoin-pegged token FBTC, developed by DeFi protocol Mantle and Bitcoin-centric crypto developer Antalpha Prime. These tokens are then bridged onto Ethereum and different blockchains.

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A multi-protocol system

Avalon Labs’ platform accepts FBTC as collateral and lends it at fastened charges. The borrowed USDt stablecoin is then deployed to high-yield strategies through the Ethena Labs artificial greenback protocol. The property employed in these methods embody Ethena USD (USDe) and Ethena Staked USD (sUSDE). The announcement claims:

“Returns are secure, safe, and handed again to Bybit Earn customers—making Bitcoin a productive asset whereas sustaining simplicity and threat management.“

In different phrases, Avalon Labs serves as a bridge between Bybit and the yield-earning potential of Ethena Labs’ protocol. Avalon Labs describes this as a “CeFi to DeFi” bridge.

The information follows Ethena elevating $100 million in late February to deploy a brand new blockchain and launch a token focused on traditional finance. In January, Ethena additionally announced plans to roll out iUSDe, a product similar to USDe however designed for regulated monetary establishments.

Bybit didn’t reply to Cointelegraph’s inquiries by publication.

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