Avalon Labs is a DeFi protocol packaged as a liquidity hub for BTCFi, and it offers some simple ways for users to passively earn rewards on their tokens. This can be done through converting USDT to the platform’s USDa stablecoin to earn yield through price appreciation, or by then staking or swapping USDa to receive sUSDa, in order to earn rewards that will also include the platform’s AVL token.
There are times when it pays to keep a stack in stables, especially when you can get paid returns on your dry powder. So with solid yields available at the moment, let’s look at some straightforward strategies using the Avalon Labs protocol.
It’s a simple process that involves a couple of swaps and then lets you pick up some passive rewards, and as you’re using stables you can take a break from thinking about crypto volatility.
That said, nothing in DeFi can ever be risk free, so before we get into the details please keep in mind the following risks to be aware of: smart contract vulnerabilities, depegs, frontend attacks, and systemic risk across DeFi and crypto. Also, this guide is not intended as financial advice or as an endorsement of the protocols and tokens involved.
What Is Avalon Labs?
Avalon Labs is a DeFi ecosystem for Bitcoin–it categorizes itself as a BTCFi liquidity hub–incorporating various onchain products and services to maximize liquidity and open up yield opportunities. And by the way, if you’re interested in reading an earlier guide to BTCFi, please check this post on Lombard Finance.
Back to Avalon though, and the approach here includes both CeDeFi lending and DeFi lending, and it’s all driven by USDa, which is a BTC-backed stablecoin. USDa can be staked on Avalon in order to mint the sUSDa token, which then provides yield that comes from borrowing fees within the platform’s lending service. This yield is accrued through sUSDa price appreciation.
The platform also has an incoming governance token called AVL, which users can accumulate through rewards, as we’ll see below. Additionally, it will be possible to stake AVL in return for the sAVL token, which itself provides governance rights.
What Is the Strategy?
The procedure we’ll go through here is simple to execute, and involves acquiring USDa and then staking it in return for sUSDa, or simply converting it into sUSDa, which will then earn yield, as mentioned, from lending fees on Avalon.
This process can also, currently, earn AVL rewards from the upcoming token airdrop, which is scheduled for Q1 2025. There’s also an alternative strategy to earn more AVL but without the sUSDa yield, as we’ll see in the process below.
Steps to Earn Rewards With Avalon Labs
First let’s look at acquiring USDa, which actually works as a complete strategy in itself.
To do this, all you need to do is go to the Swap function on the Avalon protocol, hook up your wallet there, and you can then swap from USDT to USDa. However, note that this only functions on Binance Smart Chain (BSC), so you will need to have USDT available on that network.
If you just hold USDa you will earn a 50% yield entirely in the upcoming AVL token, so if that sounds like a good deal, then you can simply do this and nothing else, which makes for a very easy strategy.
However, if…
