Our surrogate Sarah, a recent college graduate drowning in the burden of student loan debt, represents the pain and struggle of our entire generation. Every time she scrimps and saves, she invests in a future where she’s not one emergency away from financial ruin. In this uncertain landscape, crypto, with its alluring promise of outsized returns, shined as a beacon of hope. Next, it was Bybit’s Bitcoin yield, advertised everywhere on social media, luring her in with the promise of passive income. Is this really a true ladder up, or just another rung too far for most of us?
Bybit's new "Bybit Earn" integration, powered by Avalon's CeDeFi bridge, promises juicy yields on your Bitcoin. Sounds great, right? Make it work for you. Deposit your BTC, relax and make more satoshis while you sleep. Peel back the layers and a different story comes to light, one that is filled with inequity and subpar hidden dangers.
Is This Really Democratizing Finance?
At the heart of Avalon’s operation is making institutional borrowing easy. They allow the institutionals to borrow USDT using their Bitcoins as collateral, at a very cheap and fixed 8% cost. This USDT then gets funneled into Ethena Labs, pursuing high-yield strategies utilizing USDe and sUSDE. Okay, follow me here... Avalon Labs ultimately got at least $2 billion in credit lined up for its operations. Two billion dollars. Is this ringing any bells of a platform designed specifically for Sarah and her little Bitcoin haul?
Let's be honest. Bybit is marketing this as a democratization opportunity for all. The underlying mechanics seem to benefit only the truly rich. Or, to put it another way, the more you deposit, the better the returns could be. By extension, the greater the potential returns, the more quickly the rich get richer. It’s a compounding effect that deepens the inequalities that are already there.
Hidden Fees? Hidden Risks? Hidden Agendas?
Avalon claims to be a “CeFi to DeFi” bridge. BTM bridges are allowed to charge tolls, though the tolls can be often hidden. What are the fees involved? What would it mean if Ethena Labs’ high-yield strategies misfire? What about regulatory risks?
CeDeFi, as a concept, is inherently vague and exists in a regulatory gray area. While Avalon may tout the potential regulatory advantages of such a move, this lack of clear regulatory oversight is indeed a double-edged sword. It enables all that great innovation, of course, but it opens the door for exploitation. Think about it: Bybit, a major exchange, is essentially outsourcing yield generation to a relatively unknown entity, Avalon, which in turn relies on the volatile DeFi ecosystem of Ethena Labs. What could go wrong? Remember the Celsius Network?
And what about Bybit's silence? Cointelegraph reached out for comment, and…crickets. Silence speaks volumes. This would create serious accountability issues. It demonstrates both a willingness to cash in on a confusing product and an inability or unwillingness to adequately inform users about the associated dangers.
Who Really Benefits From This?
The answer, I suspect, is the 1%. Avalon had even briefly entertained the idea of launching a Bitcoin-backed Avalon debt fund, leveraging a little-known Regulation A loophole to attract US investors. This new version of Ethena Labs’ growing stablecoin is designed especially for use by regulated financial institutions. All of this adds up to a system rigged in favor of the incumbents, not retail investors or the average person on the street.
It’s not all about shiny new ideas. It’s a policy of reverse Robin Hood financial engineering—the deliberate scheme to steal wealth from everyone and redistribute it into the hands of the few. It’s the gamification of inequality, sold to us as a democratizing force.
We need to demand better. To prevent further abuses and bad investments, we need far more strenuous regulatory scrutiny of this new CeDeFi world. We need governments to step in and ensure that crypto innovations benefit everyone, not just the elite. What we really need is transparency, accountability and a financial system that serves all—not just the well-connected elite.
Don’t allow Bybit’s Bitcoin yield to be a Trojan horse. Demand answers, get curious, and do not let them turn you into a chip in a game carefully stacked against you. Forward this piece, have discussions with your peers, and help us engage everyone in a discussion about the real price of these so-called “opportunities.” The future of finance depends on it.
