Avalon Labs Launches USDa, a Bitcoin-Backed Stablecoin
Avalon Labs has announced the launch of USDa, a Bitcoin-backed stablecoin designed to unlock liquidity for Bitcoin holders without requiring them to sell their holdings. Built on LayerZero's cross-chain technology, USDa aims to position Bitcoin as a source of liquidity within both decentralized and centralized financial systems, moving beyond its traditional role as a store of value.
USDa allows Bitcoin holders to collateralize their Bitcoin in exchange for stablecoin liquidity at a fixed borrowing rate of 8%. This model enables them to participate in yield-generating activities within DeFi protocols while retaining ownership of their Bitcoin. Avalon Labs believes this feature could address liquidity challenges within the broader Bitcoin market.
To ensure stability, USDa's supply is structured to scale proportionally to Bitcoin collateral. This approach aims to mitigate depegging risks and maintain a 1:1 peg with USDT. However, its performance in fluctuating markets remains to be seen.
Avalon Labs has partnered with custodians like Cobo, Ceffu, and Coinbase Prime to offer publicly accessible custody addresses, enhancing transparency and security for both institutional and retail users.
As the crypto industry continues to explore the potential of Bitcoin-backed instruments, experts will discuss these developments at Benzinga's Future of Digital Assets event on November 19th. Industry leaders will analyze the future of Bitcoin in both DeFi and CeFi frameworks.