In May 2025, Yala was launched on mainnet. Yala is a liquidity protocol that allows BTC holders to engage their BTC to mint $YU, an over-collateralised Bitcoin-backed stablecoin, on Ethereum and Solana. This gives Bitcoin holders access to a new dimension of sustainable yield opportunities across DeFi and RWAs
Yield sources accessible to BTC holders within Yala include 1) the Yala stability pool, 2) LP farming, 3) DeFi integrations across Ethereum and Solana, and 4) Yala RealYield. Through these, users can access 1) BTC collateral rewards, 2) LP rewards, 3) DeFi rewards, and 4) RWA yields respectively.
Yala has onboarded a variety of DeFi and RWA protocols including Pendle, Uniswap, Raydium, Kamino, Securitize, and Centrifuge. This ecosystem aligns with Yala’s sustainable ecosystem strategy. Yala will continue to onboard diverse DeFi and RWA projects to expand BTC holders’ access to yield opportunities.
Source: Yala
On May 16, 2025, Yala officially launched on Ethereum mainnet, followed by its expansion to the Solana mainnet on May 19.
Bitcoin, stablecoins, and RWAs have become some of the hottest topics in the crypto space. Perhaps that explains the buzz: Yala drew significant attention during its testnet phase with 3.68M active wallets, 1.58M testnet BTC staked, and $61.7B in $YU stablecoins minted.
So what exactly is Yala, and why did it garner so much attention even before mainnet? What makes its mainnet future so promising?
Yala’s mission is clear. As covered in the previous “Yala: The Liquidity Layer for Unlocking BTC Yield Across Ecosystems” report, Yala acts as a layer connecting the vast, dormant liquidity of Bitcoin with the active liquidity in various DeFi and RWA ecosystems. This allows BTC holders to safely earn sustainable yields. The key to making this possible lies in Yala’s YBTC and $YU stablecoin.
YBTC is a receipt token that proves a user has natively committed BTC on the Bitcoin network. $YU is a stablecoin — a liquidity asset minted on Yala using BTC as collateral. This structure allows BTC holders to natively deposit their BTC with self-custody, mint $YU, and access diverse yield sources such as DeFi and RWAs.
The process of YBTC issuance and $YU utilization within the Yala ecosystem is as follows:
Yala users deposit their BTC into a specific wallet designated by Yala on the Bitcoin network.
This wallet is a multisig cold wallet, verified by decentralized validators of the Yala bridge and securely signed using Cubist’s API.
The signature is transmitted to the Ethereum network, where YBTC of equivalent value is minted to the user.
Users who minted YBTC can then deposit it into Yala and issue $YU stablecoins, which can be used in various DeFi and RWA protocols across ecosystems.
(As a side note, this applies to both the Lite and Pro modes, while in Institutional mode, it is operated through a self-custody approach.)
This process is similar to the issuance of USDS in the Sky protocol, with the key difference being that in Yala, $YU is issued using YBTC as collateral. Users who mint $YU with YBTC as collateral pay a stability fee to maintain system integrity. This fee is distributed to those who deposit $YU stablecoins in the stability pool. The stability pool plays the role of repaying debt and absorbing collateral in case of liquidations due to token price drops, and earns rewards in the form of liquidated YBTC and stability fees. We will explore this further below.
Ultimately, this process allows BTC holders to natively deposit BTC on the Bitcoin mainnet in a self-custodial manner, enabling a far more secure foundation to mint the $YU stablecoin. This allows them to gain exposure to yield opportunities across multiple ecosystems.
As important as $YU issuance is, proper liquidation mechanisms are critical. If stablecoins are issued to a level that exceeds what the collateral can realistically support in the event of liquidation, it may increase systemic risk. Therefore, depending on market conditions, it is desirable for the system to appropriately trigger liquidations of YBTC collateral. In Yala, liquidation is triggered when the collateralization ratio falls below 110 percent. As an additional safeguard, users are not allowed to borrow further once their ratio reaches 150 percent.
Yala adopts an automated liquidation system inspired by Liquity V2, which employs a Stability Pool. The Stability Pool consists of $YU stablecoins deposited by the community. This liquidity is used to cancel the debt of liquidated vaults and is compensated with YBTC collateral and an 8 percent penalty. If the Stability Pool lacks sufficient liquidity, the remaining liquidation debt and collateral are distributed proportionally to other vault holders in the market.
1.5.1 Overview
Alongside the mainnet launch, Yala introduced a new risk engine called SmartVault. SmartVault aims to build a fair and resilient DeFi infrastructure by intelligently assessing risk in real-time and distributing risk collectively across the network rather than on individual users.
SmartVault identifies risk across three layers in the DeFi ecosystem:
Individual Risk Layer: Assesses real-time risk based on a user’s transaction history, activity frequency, portfolio diversity, and reaction to volatility.
Network Risk Layer: When individual risk rises, the system avoids forcing immediate liquidation and instead initiates gradual, collective risk mitigation. If a user’s collateral ratio reaches a warning threshold, temporary support is provided from the community risk pool. The system automatically reallocates some assets to optimize exposure and incentivizes others to participate in risk sharing.
Systemic Risk Layer: Risks that impact the entire system—such as oracle hacks, major depegs, or black swan events—are not borne solely by the affected users. Instead, costs are distributed rationally based on network contribution and capacity to absorb risk, using protocol fees, user-provided insurance pools, and the treasury.
However, if individual risks are too well protected by the network, some users may exploit this by taking excessive risks—leading to moral hazard. To prevent this, the system utilizes multi-agent reinforcement learning to analyze users' risk appetite and behavior, dynamically adjusting a responsibility coefficient for each user.
For instance, risk-prone users bear a higher level of responsibility, while conservative users who contribute to risk-sharing are better protected. Of course, user trading data and portfolios are highly sensitive, so privacy-preserving technologies like FHE or ZKP are used to ensure fair evaluation without compromising user privacy.
1.5.2 Implementation
SmartVault is built on top of the existing Yala protocol. Its key components and their roles are as follows:
SmartVaultCRSM Contract: Maintains existing collateral and debt management functions while adding user behavior-based risk analysis, progressive liquidation mechanisms, and dynamic responsibility coefficients. For example, if a user's projected collateral ratio is expected to fall below the warning threshold within 24 hours, the system does not immediately liquidate but intervenes using network funds.
CollectiveRiskPool Contract: Enhances the existing stability pool with multiple tiers, introducing emergency fund management, automated rebalancing, and more.
IncentiveEngine Contract: Distributes rewards to users who participate in risk-sharing. It tracks each user’s contribution to network stability and adjusts incentives accordingly.
These extensions integrate seamlessly with Yala’s infrastructure and allow for optional advanced features like enhanced risk protection, decentralization, and incentive design.
Yala plans to roll out SmartVault functionalities in phases:
Phase 1: Build an MVP with core functionality. This includes user behavior-based risk profiling and a basic risk pool.
Phase 2: Add liquidation forecasting and real-time adjustment of individual responsibility coefficients.
Phase 3: Introduce FHE and ZKP-based data processing and risk validation, along with game theory-based responsibility adjustment algorithms.
Yala stands out from other projects in several key ways:
Native BTC Collateral: BTC holders can store their assets on the Bitcoin mainnet in a trustless and self-custodial manner.
Liquidity Leverage: Instead of building its own ecosystem, Yala enables Bitcoin utility within already liquid networks like Ethereum and Solana, exposing users to more strategies and yield sources.
Multichain Deployment: Yala supports not only Ethereum but also Solana, with work in progress to expand to more networks.
Sustainable Yield: Yala allows users to access real yield sources across DeFi and RWA, not just block rewards.
With Yala’s mainnet launch, BTC holders now have the opportunity to access secure, native exposure to DeFi and RWA yield opportunities across ecosystems. Let’s now take a look at what types of yield opportunities BTC holders can actually unlock.
BTC holders using Yala can access a wide variety of yield opportunities through the $YU stablecoin, as outlined below.
2.1.1 Stability Pool
As described in Part 1.4, $YU deposited in the Stability Pool is used to repay debt when a specific vault enters the liquidation process. In return, depositors earn collateral, penalty fees, and YALA rewards. Since maintaining sufficient $YU in the Stability Pool is beneficial for the overall system, Yala incentivizes users to deposit $YU into the pool. Therefore, users can earn rewards by depositing $YU into the Stability Pool.
2.1.2 LP Farming
Source: Yala
Liquidity pools that enable smooth exchanges with USDC and WBTC are essential for a seamless DeFi UX. To support this, Yala has created USDC/YU and WBTC/YBTC liquidity pools on Uniswap. Users can deposit liquidity to earn fee income and farm Berry, Yala’s point-based incentive program.
2.1.3 DeFi Marketplace
Source: Yala
Yala users can go beyond simply providing liquidity for $YU and YBTC on Ethereum’s Uniswap. They can also engage with more advanced DeFi protocols or use them across multiple chains, such as DeFi platforms on Solana and Ethereum:
Raydium: Raydium is a leading AMM DEX in the Solana ecosystem. $YU holders can contribute YU-USDC liquidity to Raydium to support the Solana-based $YU market and earn rewards.
Kamino: $YU holders can deposit $YU into Kamino’s YU-USDC liquidity vault on Solana. Kamino operates these deposits as LP tokens on Raydium, providing features like auto-rebalancing and range settings for easier liquidity provision.
Pendle: Pendle is a DeFi protocol that lets users manage yield-bearing tokens by separating yield and principal components. $YU holders can choose to use YT-YU to forgo principal and gain leveraged interest and points, or PT-YU to give up interest and points in favor of earning high yield on the principal.
2.1.4 Yala RealYield
Source: Yala
Yala RealYield is a platform that enables BTC holders to explore, compare, and invest in various RWA yield opportunities. Its goal is to onboard multiple RWA providers, allowing users to access a range of strategies and earn sustainable returns. Compared to the volatility of interest rates in the DeFi marketplace—which can fluctuate based on market conditions and trading volume—RWA yields available through Yala RealYield offer a more stable alternative.
Yala RealYield can onboard not only bonds, but also private credit, real estate, corporate debt, and other asset types. Yala is actively pursuing partnerships with a variety of RWA protocols. Two notable examples are Securitize and Centrifuge.
Securitize: Securitize is a regulated RWA tokenization platform that enables the compliant issuance and management of digital securities on-chain, including tokenized equities, funds, and bonds. Backed by major institutions like BlackRock, Securitize is at the forefront of bridging traditional finance with blockchain infrastructure. Its platform empowers investors to access real-world assets in a digital format, unlocking liquidity and efficiency while staying fully compliant with regulatory standards.
Centrifuge: Centrifuge is an RWA tokenization platform that converts various assets into NFTs and offers loans using them as collateral. Centrifuge is set to onboard onto Yala RealYield, enabling BTC holders to access tokenized RWAs managed by web3-native asset manager Anemoy.
In the future, Yala plans to offer additional RWA-related products such as lending services backed by RWA tokens and vaults that bundle various RWA assets.
2.2.1 Yala’s Sustainable Ecosystem
In summary, Yala has opened the door for Bitcoin holders to access sustainable yield sources across DeFi and RWA through $YU . Has this opportunity resonated positively with BTC holders? Soon after mainnet launch, Yala has already attracted staking of 1.17k BTC and enabled the minting of $30.12M worth of $YU on Ethereum mainnet.
“Bitcoin has long been the most powerful store of value in crypto, but it's historically been isolated from broader capital markets. With Yala, we're unlocking that dormant liquidity in a self-custodial, capital-efficient way, bringing BTC into DeFi, RWAs, and beyond without compromising on user sovereignty.” KT, Co-Founder at Yala
Considering that traditional BTC holders tend to show little interest in bridging or yield generation, this is an encouraging result. It demonstrates that Yala provides safe BTC bridging and focuses solely on sustainable yield sources. Yala decides which projects to onboard into its ecosystem based on strict criteria:
Sustainable yield: Projects onboarded to Yala must be based on real yield such as DeFi fees or RWA income, not inflation-driven rewards.
Protocol maturity: Projects must have high reliability in terms of operations and smart contract security.
High-volume environment: Liquidity is key to generating yield. Yala onboards projects built on highly liquid networks such as Ethereum and Solana.
Active community: Projects must have vibrant user and developer communities.
Projects like Pendle, Raydium, Kamino, Securitize, and Centrifuge, which have already joined the Yala ecosystem, meet all of these criteria. This ecosystem strategy supports Yala’s long-term sustainability.
2.2.2 Yala’s Journey Has Just Begun
Yala’s journey is only just beginning. Yala will continue to onboard diverse DeFi and RWA projects to broaden BTC holders’ access to yield opportunities. This includes expanding the utility of the $YU stablecoin across lending, AMMs, and various RWA platforms. In addition, the upcoming launch of Yala’s governance token will mark the start of Yala DAO and enable decentralized governance.
Yala’s mainnet is now live, and BTC holders can natively stake their BTC to mint $YU stablecoins and access various yield sources such as Pendle, Kamino, Raydium, and the Stability Pool. Early users who participate in Yala’s ecosystem activities may be eligible for future rewards like Berry points and airdrops, as well as governance roles.
To access the Yala Mainnet, visit https://app.yala.org.
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