BTC-Backed USDa Soars To $230M Market Cap In Two Weeks

USDa, a Bitcoin-backed stablecoin from Avalon Labs, has rocketed to a market cap of $230.7 million just two weeks after going live.

The growth positions Avalon as the third-largest collateralized debt protocol with deposits equating to a total value locked (TVL) of $474 million, ranking it behind Sky (formerly MakerDAO) with $5.3 billion and JustStables with $2 billion, according to DeFi Llama.

USDa has enjoyed impressive growth since going live on Nov. 12, with users minting $100 million worth of the stablecoin against $200 million in deposits on its debut day. Users can mint USDa against deposits in the form of BTC and FBTC.

Avalon has quickly emerged as the second-largest protocol on BitLayer, a Bitcoin Layer 2 network supporting the BitVM virtual machine, amid the rise of USDa. Avalon currently makes up 46% of BitLayer’s $532.4 million TVL.

USDa is compatible with networks supporting Ethereum Virtual Machine functionality, with 51% of its TVL on Ethereum and 47.7% residing on BNB Chain. USDa launched on Taiko on Nov. 21.

USDa’s growth appears to be propelled by users being able to borrow the token at a fixed annual percentage rate (APR) of 8% and stake the asset for more than 15%, which it claims are derived from liquid staking tokens, lending, and Pendle PT tokens. However, it remains to be seen whether the high yield will be sustainable over the longer term.