Avalon Labs Raises $10 Million to Enhance Bitcoin-Backed Stablecoin USDa
Avalon Labs, a blockchain company focused on enhancing Bitcoin's financial utility, has raised $10 million in a Series A funding round. The funding was led by Framework Ventures with participation from UTXO Management and Kenetic Capital. Avalon Labs plans to use this capital to promote its Bitcoin-backed stablecoin, USDa, and expand its decentralized finance (DeFi) services.
Revolutionizing Bitcoin’s Use Case
Avalon Labs aims to transform Bitcoin from a static store of value into a dynamic financial asset. USDa allows users to collateralize their Bitcoin holdings to mint stablecoins at a fixed borrowing rate of 8%. This model provides liquidity while maintaining exposure to Bitcoin price changes.
Since launching in November 2024, USDa has gained traction in the DeFi sector, surpassing $700 million in total value locked (TVL). USDa is now the second largest collateralized debt position project globally, with a market size of $84.10 million as of December.
Avalon also offers additional financial products, including Bitcoin-backed lending services, yield-generating savings accounts, and a credit card, which enhance its ecosystem.
A Thriving Stablecoin Market
The recent funding round coincides with the expanding stablecoin market, where new entrants are providing diverse solutions. Earlier this month, Ripple launched its fiat-backed stablecoin, RLUSD, supported by cash reserves and government bonds.
Ripple's stablecoin aims to offer stability and liquidity across exchanges like Bitso and Uphold, partnering with institutions in the US, UK, UAE, and Asia for broader access.
Other companies, such as BitGo, plan to launch their own stablecoins, with BitGo set to release USDS in 2025 as an "open-participation stablecoin," according to Coinspeaker.
PayPal also entered the stablecoin market with the launch of its native stablecoin, PayPal USD (PYUSD), in 2023.
Avalon's USDa stands out by utilizing Bitcoin as collateral, offering a decentralized alternative to fiat-backed stablecoins from Ripple, PayPal, and BitGo.