Source: Cointelegraph Original: "{title}"
Cryptocurrency exchange Bybit has partnered with lending protocol Avalon to offer its users Bitcoin (BTC) yields.
According to an announcement from Avalon Labs on April 14, this centralized and decentralized finance hybrid (CeDeFi) protocol will become part of Bybit's yield product, ByBit Earn. Avalon stated that users can earn Bitcoin yields through arbitrage in its fixed-rate institutional lending tier.
Source: Avalon Labs
Avalon Labs announced in March that it had raised at least $2 billion in credit lines, which can be expanded based on demand. The product allows institutional borrowers to access Tether (USDT) liquidity at an 8% fixed borrowing cost without liquidating their Bitcoin holdings.
In February, Avalon Labs also announced that it was considering issuing a debt-type public fund collateralized by Bitcoin. Avalon Labs co-founder Venus Li stated at the time that the fund might utilize the U.S. Regulation A securities exemption for issuance.
"We spent years researching how Regulation A could be applied in traditional finance and whether it could be a viable path for cryptocurrency companies. Although there are limited successful precedents in the cryptocurrency industry, our analysis of previous SEC-approved cases indicates that this is a viable way forward."
Avalon Labs' product is a CeDeFi protocol that sits between decentralized finance (DeFi) and centralized finance (CeFi). Such products often have advantages in meeting regulatory requirements for integration with CeFi platforms due to stronger capital liquidity and access control.
ByBit Earn integrates the 1:1 Bitcoin-pegged token FBTC developed by DeFi protocol Mantle and cryptocurrency developer Antalpha Prime, which focuses on Bitcoin. These tokens are then bridged to Ethereum and other blockchains.
The Avalon Labs platform accepts FBTC as collateral and lends at a fixed rate. The borrowed USDT stablecoin is then deployed into high-yield strategies through the Ethena Labs synthetic dollar protocol. The assets used in these strategies include Ethena USD (USDe) and Ethena Staked USD (sUSDE). The announcement stated:
"The yields are stable, secure, and returned to ByBit Earn users—turning Bitcoin into an income-generating asset while maintaining simplicity and risk control."
In other words, Avalon Labs acts as a bridge between Bybit and the yield potential of the Ethena Labs protocol. Avalon Labs describes it as a "bridge from CeFi to DeFi."
Before this announcement, Ethena raised $100 million at the end of February to deploy a new blockchain and launch a token focused on traditional finance. Ethena also announced in January plans to launch iUSDe, a product similar to USDe but designed for regulated financial institutions.
As of the time of publication, Bybit had not responded to Cointelegraph's inquiries.
Related: Speculation is a double-edged sword for DeFi
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