YZi Labs, the venture arm previously known as Binance Labs, announced Monday that it has invested in Avalon Labs

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Venture capital firm YZi Labs, the investment arm previously known as Binance Labs, has invested in Avalon Labs, an emerging on-chain capital markets platform that specializes in Bitcoin-backed financial products.

Announced Monday, the move will see Avalon Labs continue expanding its operations and products to build out a complete Bitcoin financial institution.

"We are pleased to announce our investment in Avalon Labs, a company that is pushing the boundaries of DeFi and Bitcoin to create new financial paradigms," said YZi Labs Investment Director Alex Odagiu. "At YZi Labs, we are constantly on the lookout for projects that combine technical prowess with a clear, long-term vision.

"Avalon exemplifies this commitment by leveraging Bitcoin's inherent security and liquidity to build a fully integrated capital markets platform. They are bridging the gap between Bitcoin's vast potential and its real-world usability, transforming it into an active economic asset for global markets."

Operating a CeDeFi lending platform that includes Bitcoin-backed lending, stablecoins, yield-generating savings accounts, and a forthcoming credit card, Avalon Labs provides a way for Bitcoin holders to access instant liquidity without selling their coins.

This is achieved through USDa, the firm's flagship product, which is a Bitcoin-backed stablecoin.

According to DeFiLlama, the project's USDa has around $613 million in total value locked, rendering it the second-largest Collateralized Debt Position (CDP) stablecoin project, trailing only Sky's USDS.

Avalon's USDa TVL has grown quickly since the project's launch, with pools distributed across multiple blockchains.

The largest portions of TVL are on Ethereum and BNB Smart Chain, each holding hundreds of millions in collateral.

"We are excited to welcome YZi Labs as an investor in our vision for the future of decentralized finance," said Charles St-Arnaud, CEO of Avalon Labs. "Their expertise and network will be invaluable as we continue to expand our institutional lending business and pursue regulatory compliance across multiple jurisdictions.

"Our goal is to become the first fully regulated on-chain Bitcoin financial institution, and this investment brings us one step closer to achieving that vision."