Avalon Labs Cuts AVL Supply by Over 40%, Kicking Off New Deflationary Cycle
Avalon Labs, a decentralized finance company building a capital markets platform on Bitcoin, has taken a bold step to bolster the long-term value of its token. On June 9, the development team announced that it had burned 80 million AVL tokens, equivalent to approximately $16 million, marking the beginning of a deliberate deflationary strategy.
The tokens permanently removed from circulation largely come from unclaimed airdrops since the March 2024 campaign. With this action, the circulating supply of AVL has been reduced by approximately 44%, increasing the scarcity of the token and contributing to reestablishing the supply-demand balance in the ecosystem.
The move quickly created a positive effect on the market. AVL’s price jumped more than 18% immediately after the announcement, climbing to the top of the Bybit futures trading rankings. The community also noted a strong consensus on Avalon’s decision, especially after more than 100,000 users participated in the airdrop and contributed to building the platform over the past year.
Avalon Labs stands out as one of the few projects that are applying a Bitcoin-collateralized on-chain capital markets model. Their platform has distributed more than $1.2 billion in BTC-collateralized loans. Avalon recently secured a $2 billion credit line from leading Asian corporations, showing its potential to expand into institutional client segments.
In addition to providing lending services, Avalon also created USDa – the first stablecoin 100% backed by Bitcoin, giving users access to liquidity without having to sell BTC. The platform also allows deposits of FBTC (a 1:1 BTC-backed asset) to borrow USDT at fixed interest rates – loans that are then deployed into yield-generating strategies via Ethena and other CeDeFi protocols.
Avalon is currently active on over 20 public blockchains and 50 private lending markets, with a total value locked (TVL) exceeding $1.1 billion, according to DeFiLlama.
Last month, Avalon continued to attract investor attention when YZi Labs – an investment fund formerly owned by Binance – announced a strategic investment in the project. Earlier in February, Avalon also revealed plans to launch a BTC-backed public debt fund under the supervision of the US Securities and Exchange Commission (SEC), paving the way for a wave of traditional investors to enter the digital finance sector.
