TL;DR
- Bybit partnered with Avalon Labs to offer BTC yield through a CeDeFi model, without requiring users to sell their assets.
- The system allows users to access cash loans using BTC as collateral and generate income by leveraging arbitrage in fixed-rate lending.
- Avalon is introducing a new functionality called BTCFi, aiming to integrate Bitcoin into active financial use cases like lending and yield, while maintaining self-custody.
Bybit announced a partnership with Avalon Labs to provide Bitcoin-based yield through a CeDeFi model. This integration includes Avalon’s protocol and enables users to earn income from their BTC holdings without selling them.
The Bybit’s system leverages arbitrage opportunities in a fixed-rate institutional lending platform, offering new yield alternatives for users who previously only held their assets long term.
Bybit Turns Bitcoin into a Productive Asset
Through this hybrid structure, users can obtain cash loans using Bitcoin as collateral. Unlike traditional services, they don’t rely on banks or have to sell their assets to gain liquidity. They can also earn yield while keeping their BTC exposure. This transforms Bitcoin into a productive asset, similar to stocks or real estate, without affecting its decentralized nature.
Avalon seeks to expand Bitcoin’s use and capabilities beyond being a store of value. The protocol introduces a new functional category called BTCFi, focused on integrating BTC into financial activities like lending and interest generation.
Currently, BTC cannot be used as collateral in banks, and its utility in everyday contexts remains limited. Avalon aims to solve this issue by building infrastructure that connects CeFi and DeFi markets under clear rules.
Expanding BTC’s Capabilities
One of the most important aspects of this proposal is access to stablecoins like USDT, available to users who lock their BTC as collateral. Loans are issued at a fixed rate with no requirement to sell BTC, allowing greater predictability and better risk management. This dynamic introduces a functionality that was previously inaccessible to BTC holders.
Avalon has already secured partnerships with large-scale financial institutions and obtained over $2 billion in credit lines. This operational base supports the model and allows it to scale without compromising stability. The partnership with Bybit marks a new phase in expanding these capabilities to a broader user base, enabling more BTC holders to put their assets to work
