Avalon Labs Has Launched the Institutional Yield Layer on Bybit Earn, Opening Bitcoin to DeFi

Bybit Earn is a yield product offered by Bybit, a centralized exchange (CEX) for trading cryptocurrencies such as Bitcoin. Bybit Earn, as an offering, is more like a savings account than a fixed-income product

Avalon Labs has formally introduced the institutional yield layer on Bybit Earn, a new model for lending Bitcoin and generating yield that combines centralized finance (CeFi) efficiency with decentralized finance (DeFi) innovation.

This initiative centers on using Avalon’s fixed-rate institutional borrowing infrastructure and integrating FunctionBTC ($FBTC), a version of Bitcoin fully compatible with DeFi protocols and pegged to Bitcoin. This combination allows Bitcoin to become a productive, yield-generating asset without exposing users to the direct dynamics of DeFi, which can be both complex and volatile.

At the core of this system is $FBTC, a pegged Bitcoin asset that holds a 1:1 value with Bitcoin. Holding over $1.25 billion in terms of total value locked (TVL), $FBTC forms a solid bridge, bringing Bitcoin into DeFi across Ethereum and other compatible blockchains. It lets users access DeFi protocols and yield strategies while keeping the economic exposure of Bitcoin.

In this innovative structure, Avalon serves as the intermediary that transforms passive Bitcoin into an active yield-generating instrument. It all starts with $FBTC deposited as collateral on Avalon’s institutional platform. Next, Avalon lends against the $FBTC at fixed interest rates. This setup offers predictability and transparency to both borrowers and lenders.

The capital that is borrowed—denominated in USDT—gets put to work in high-yield strategies, using yield-bearing synthetic assets like $USDe and $sUSDE, which Ethena Labs issues. These DeFi-native assets are designed to hold their value and pay off consistently, making them ideal for Avalon to construct strategies around.

The ingenuity here is not just in the technology but in the structure of the ecosystem. The entire yield cycle—from collateralization to deployment and eventual yield distribution—is automated and optimized. This means that users can access the benefits of institutional-grade yield farming without the complexities or risks typically associated with DeFi involvement.