Highlights:

  • The Bitcoin blockchain underpins BTC, widely regarded by investors as a “digital store of value.”
  • The Bitcoin blockchain is deemed highly secure due to its decentralized network, where transactions are encrypted and verified by multiple nodes.

The creator of a stablecoin based on the Bitcoin blockchain, Avalon Labs has raised USD 10 million in an early-stage funding round to expand its decentralized finance capabilities and cryptocurrency offerings.

The Series A funding round was led by Framework Ventures, with additional support from UTXO Management, Presto Labs, Kenetic Capital, and other investors.

The Bitcoin blockchain underpins the Bitcoin cryptocurrency (BTC), often regarded by investors as a “digital store of value.” However, its use as a currency is challenged by significant volatility. Over the past six months, Bitcoin’s value has surged from USD 60,000 to over USD 100,000, with fluctuations of several thousand dollars within a single day.

A stablecoin, by contrast, is a cryptocurrency with its value “pegged” to another currency, such as the U.S. dollar, ensuring it consistently trades at a one-to-one ratio. Avalon Labs’ stablecoin, USDa, leverages the security of the Bitcoin blockchain as its foundation, maintaining a fixed value of USD 1 per token regardless of Bitcoin’s current market price.

The Bitcoin blockchain is widely regarded as highly secure due to its decentralized network, where every transaction is encrypted and validated by multiple nodes. Transactions are permanently recorded using cryptographic hashing, which makes them tamper-proof. The network’s security and data integrity are upheld by leveraging significant computational power.

The company reported that its platform supports over 200,000 active users and manages more than 20,000 bitcoins on their behalf. Its vision is to evolve Bitcoin beyond its role as “digital gold,” enabling it to function as a liquid financial instrument that integrates seamlessly into the broader financial system.

Other examples of stablecoins in the cryptocurrency industry include Tether (USDT), USD Coin (USDC), and DAI. Tether, with a market capitalization of USD 128.9 billion, is the largest stablecoin in circulation. Stablecoins play a crucial role in the cryptocurrency ecosystem, offering a stable, non-volatile means to transfer funds between exchanges and facilitate the purchase of goods and services.

In 2023, PayPal Holdings Inc. introduced its own stablecoin, PayPal USD, issued by Paxos Trust Co. LLC and pegged to the U.S. dollar. Cryptocurrencies, first popularized by Bitcoin’s emergence in 2009, have been around for over a decade. This month, Bitcoin’s value surpassed USD 100,000 for the first time in history, reigniting interest in the cryptocurrency market.

Alongside its stablecoin, Avalon provides services such as Bitcoin-backed loans, yield-generating savings accounts, and credit cards.