Avalon Labs, the developer of a stablecoin built atop the bitcoin blockchain, announced today it has raised $10 million in a new early-stage funding round to grow its decentralized finance capabilities and cryptocurrency.

The Series A round was led by Framework Ventures with participation from UTXO Management, Presto Labs and Kenetic Capital among others.

The bitcoin blockchain acts as a foundation for the bitcoin cryptocurrency, or BTC, which has long been seen by investors as a “digital store of value.” However, it also has problems when used as a currency given its high volatility. Over the past six months, bitcoin has risen from $60,000 to over $100,000. The currency can rise or fall by several thousand dollars within 24 hours.

A stablecoin, on the other hand, is a cryptocurrency that has a value “pegged” to another currency, for example, the U.S. dollar so it will always trade one-to-one. Avalon Lab’s stablecoin, USDa, uses the security of the bitcoin blockchain as its foundation and each token trades for $1 USD no matter how much BTC is currently worth.

The bitcoin blockchain is considered highly secure because it uses a decentralized network where every transaction is encrypted and verified across multiple nodes. As transactions are added to the network cryptographic hashing is used to make them impossible to alter after the fact by using computing power to secure the entire network and ensure data integrity.

The company said its platform currently serves more than 200,000 active users and manages more than 20,000 bitcoins for them. The company’s vision is to transform bitcoin from mere “digital gold,” and allow it to become a liquid financial instrument that can be used efficiently as part of a financial system.

Examples of other stablecoins in the cryptocurrency industry include Tether, USD Coin and DAI. Tether, also known as USDT, is the largest stablecoin by market cap at $128.9 billion. Stablecoins are useful to the cryptocurrency industry because their lack of volatility provides an easy way to move money between currency exchanges and to buy goods and services.

PayPal Holdings Inc. launched its own stablecoin, PayPal USD, in 2023 issued by Paxos Trust Co. LLC, also pegged to USD. Cryptocurrencies have been around for over a decade, heavily popularized by the existence of bitcoin, which emerged in 2009. The value of BTC recently exceeded $100,000 this month for the first time in history, rejuvenating attention in the cryptocurrency.

In addition to its stablecoin, Avalon offers services for bitcoin-backed loans, yield generating savings accounts and credit cards.

Image: Pixabay