Avalon Finance, Unlocking Liquidity With Bitcoin-Backed Loans

What is Avalon Finance?

Avalon Finance (also known as Avalon Labs) is a CeDeFi platform a hybrid of centralized finance (CeFi) and decentralized finance (DeFi) that allows users to access instant stablecoin liquidity using Bitcoin as collateral, without having to sell it.

https://www.avalonfinance.xyz/

Its primary stablecoin, USDa, can be borrowed at a fixed rate of 8% APR, giving borrowers predictability and stability.

Avalon combines the best of both worlds:

  • Institutional security (CeFi): professional grade custody and institutional liquidity.
  • Transparency and efficiency (DeFi): blockchain powered lending with smart contracts and real-time visibility.

It also implements isolated lending pools per asset, increasing capital efficiency and containing risk during market volatility.

Advantages of BTC Backed Borrowing:

  • Keep your BTC exposure: Borrow against your Bitcoin while retaining long term upside potential.
  • Predictable fixed rate: 8% annual rate is stable compared to traditional fluctuating systems.
  • High liquidity and multichain access: Supports Ethereum, Arbitrum, BNB Chain, and more with strong AUM.
  • Enhanced security: Institutional grade custody and automated high frequency liquidation engines reduce slippage risk.
  • Additional DeFi innovation: Features like looping for leveraged rewards and “Avalon Points” that can qualify for airdrops or incentives.

Insitutional Backing and Growth:

  • In December 2024, Avalon Labs raised $10 million in a Series A round led by Framework Ventures to expand its BTC backed stablecoin ecosystem.
  • In March 2025, it secured a minimum $2 billion institutional credit line, one of the largest in Bitcoin backed lending.
  • Avalon is also exploring the launch of the first U.S. public Bitcoin backed debt fund under SEC Regulation A, potentially opening access to retail investors.

Risks:

  • Liquidation risk: A sharp drop in BTC value may trigger automated liquidations if your health factor falls below the safe threshold.
  • Technology complexity: As with all DeFi platforms, vulnerabilities in smart contracts remain a possibility, though Avalon undergoes audits and stress testing.
  • Regulatory uncertainty: Evolving rules around DeFi, stablecoins, and BTC backed products may impact future operations, especially in the U.S..
  • Custodian reliance: While custodians are institutional grade, reliance on third parties introduces a layer of centralization.

Avalon Finance offers a powerful solution to unlock liquidity from BTC without sacrificing long term upside. Fixed interest rates, robust transparency, and institutional support make it one of the most promising BTCFi platforms.

Risks exist liquidation, regulation, and smart contract complexity but they are manageable with prudent monitoring and diversification. With strong financial backing, multichain support, and innovative lending mechanics, Avalon positions itself as a bridge between Bitcoin’s value storage and modern financial utility.

In short, Avalon Finance represents the future of Bitcoin backed finance, unlocking liquidity today while preserving tomorrow’s upside.