Bybit Partners Avalon for 8% Bitcoin Yield

Crypto exchange Bybit has announced a partnership with lending protocol Avalon to offer Bitcoin yield to its users. This integration is part of Bybit's yield product, Bybit Earn, and allows users to earn yield off of Bitcoin by arbitrating on Avalon's fixed-rate institutional borrowing layer.

Avalon Labs, the company behind the lending protocol, had previously announced in March that it had raised a minimum of $2 billion worth of credit. This product allows institutional borrowers to access USDt liquidity without liquidating their Bitcoin holdings at a fixed 8% borrowing cost. In February, Avalon Labs also hinted at the possibility of issuing a Bitcoin-backed debt-focused public fund, leveraging a Regulation A US securities exception.

The integration leverages Avalon Labs’ 1:1 Bitcoin-pegged token FBTC, developed by DeFi protocol Mantle and Bitcoin-centric crypto developer Antalpha Prime. These tokens are then bridged onto Ethereum and other blockchains, allowing for a seamless transition between centralized and decentralized finance (CeDeFi).

Avalon Labs’ platform accepts FBTC as collateral and lends it at fixed rates. The borrowed USDt stablecoin is then deployed to high-yield strategies through the Ethena Labs synthetic dollar protocol. The assets employed in those strategies include Ethena USD (USDe) and Ethena Staked USD (sUSDE). The announcement claims that returns are stable, secure, and passed back to Bybit Earn users, making Bitcoin a productive asset while maintaining simplicity and risk control.

This integration serves as a bridge between Bybit and the yield-earning potential of Ethena Labs’ protocol, described by Avalon Labs as a “CeFi to DeFi” bridge. The news follows Ethena raising $100 million in late February to deploy a new blockchain and launch a token focused on traditional finance. In January, Ethena also announced plans to roll out iUSDe, a product identical to USDe but designed for regulated financial institutions.