Avalon Labs is designing an innovative collateralized debt fund in Bitcoin, opening new possibilities for investors who wish to gain exposure to the cryptocurrency market without directly purchasing BTC.
With this initiative, Avalon Labs aims to increasingly integrate Bitcoin into the traditional financial landscape.
In the meantime, the crypto platform manages an on-chain capital market with its own stablecoin, and has just launched its governance token AVL.
Let’s delve deeper into the discussion in this article
Avalon Labs aims for the first Bitcoin-backed debt fund
Avalon Labs is planning to launch a public fund focused on debt, with a fundamental innovation: the debt securities will be collateralized in Bitcoin.
Let’s talk about debt instruments (such as bonds or loans) that allow investors to be compensated with an interest rate, but with the guarantee that the payments are secured by Bitcoin.
Usually in the world of traditional finance, such debt products are denominated in fiat currency, being classified as low risk.
In this case, Avalon wants to create an instrument backed by a digital asset like Bitcoin, potentially more rewarding than traditional counterparts but at the same time also riskier.
The initiative is part of the framework of Regulation A of the SEC, which allows companies to raise capital through public offerings without having to comply with the onerous requirements of traditional registration. In other words, Avalon could attract investors, both accredited and non-accredited, without the obligation to follow all the bureaucratic registration procedures that would be necessary for a traditional IPO (initial public offering).
Nowadays, Regulation A is widely used by fund managers, real estate investment trusts (REITs), and private companies seeking to access public markets while maintaining regulatory compliance. Avalon could be the first in this niche to offer an investment vehicle focused on debt and based on Bitcoin.
Experts believe that such a tool could attract a large number of investors who wish to gain exposure to the Bitcoin market without necessarily purchasing the cryptocurrency directly. If the initiative proves successful, Avalon Labs could become one of the pioneers of a new category of financial products. This move would be a true revolution for that niche of the financial sector that invests in cryptographic markets.
Bitcoin increasingly present in the world of traditional finance
Bitcoin is progressively finding its place in the world of traditional finance, with multiple signals indicating the entry of the cryptocurrency into regulated circuits. Avalon Labs, with its debt fund initiative, is just the latest example of how Bitcoin is becoming an increasingly relevant asset in the global financial landscape. Traditionally seen as a store of value or a speculative tool, Bitcoin is beginning to be recognized also as a possible collateral for debt instruments, opening new opportunities for institutional and retail investors.
The move by Avalon Labs represents an attempt to push the adoption of financial products supported by Bitcoin, making them accessible not only to cryptocurrency enthusiasts but also to traditional investors. The goal of the initiative is to position Bitcoin (BTC) not only as a store of value, but as a dynamic financial instrument capable of generating yield, leveraging the opportunities offered by decentralized finance (DeFi).
Through the use of Regulation A, often referred to as “mini-IPO,” Avalon Labs seeks to overcome the difficulties of a traditional SEC registration, while maintaining compliance with regulations and ensuring transparency. This approach, frequently used by real estate investment trusts (REITs) and private funds, offers an investment structure that could make Bitcoin accessible even to retail investors.
In this way, Avalon Labs aims to bridge the gap between traditional finance and the growing cryptocurrency market, paving the way for a new era of regulated financial instruments based on Bitcoin.
Avalon Labs and its offering with the stablecoin USDa
While Avalon Labs aims for a new regulated debt fund based on bitcoin, it already offers a very interesting stablecoin product within the DeFi industry.
The Avalon platform is indeed centered on the stablecoin USDa, which provides Bitcoin holders with immediate liquidity and the stability of a fixed lending rate.
In practice, users can deposit FBTC, a wrapped version of Bitcoin, into the protocol and borrow USDa at a fixed rate of 8%. At the same time, holders of the stablecoin have the advantage of being able to earn a fixed yield of 35% on the stake. Additionally, USDa can be easily converted into USDT to facilitate cross-chain interoperability and the flow of money on other DeFi protocols.
At the moment Avalon boasts the presence of over 300,000 active wallets that interact with its application, with a TVL of 2 billion dollars.
From October 2024 onwards, there has been a real boom in activity on Avalon, considering the presence of an airdrop incentive for the early adopters of the platform.
Just yesterday Avalon launched its governance token AVL on the Ethereum blockchain, BNB chain, and Merlin. The asset debuted with a listing on the centralized exchange Bybit, achieving moderate success. Now AVL is priced at 0.26 dollars per token, with a capitalization of 42 million dollars, in bear of 40% compared to prices in the last 24 hours.
