Yala is a Bitcoin-native liquidity protocol designed to enable Bitcoin holders to generate yield from Decentralized Finance (DeFi) and Real World Assets (RWAs) without relinquishing self-custody. The protocol's core function is to transform Bitcoin from a passive store of value into a productive, yield-generating asset through the minting of its native liquidity asset, $YU, against over-collateralized Bitcoin deposits. ^{[1] [2]}​

Overview

Yala was developed to address the significant gap between Bitcoin's large market capitalization and its relatively low utilization within the DeFi sector. The project's whitepaper noted that while Bitcoin represented over half of the total cryptocurrency market capitalization, its Total Value Locked (TVL) in DeFi applications was comparatively small, indicating a large, untapped potential for liquidity. The protocol's stated mission is to "Create The Bitcoin Yield Standard" by building secure infrastructure that connects Bitcoin's liquidity to yield opportunities, particularly in the RWA market. ^{[3] [2]}​

The project operates under the tagline "Sovereign Bitcoin Money," emphasizing its commitment to user self-sovereignty, low liquidation risk, and maintaining full exposure to Bitcoin. The architecture is designed to be trust-minimized, allowing users' BTC to remain on the Bitcoin blockchain to avoid third-party custody risks. The ecosystem is managed by two primary entities: Yala Labs, the research and development organization that authored the project's whitepaper, and the Yala Foundation, which is responsible for overseeing lending parameters, interest rates, and the initial issuance of protocol tokens. The name "Yala" is derived from the Sanskrit word for "dwelling" or "resting place," symbolizing the protocol as a place where Bitcoin can "rest productively." ^{[1] [2]}​

Yala's growth model is described as a "Sustainable Flywheel," a cyclical process intended to drive adoption. The cycle begins with the long-term demand for Bitcoin, which encourages users to provide BTC as collateral, thereby creating liquidity within the Yala ecosystem. This available liquidity and the associated yield opportunities are designed to attract wider user adoption. In turn, increased adoption is expected to fuel further demand for Bitcoin within the protocol, restarting the cycle. As of late 2025, the protocol reported a Total Value Locked (TVL) of approximately $249.76 million. ^[1]​

History

The Yala project announced several key developments throughout 2025. On March 17, 2025, the project published details about its different user-facing products: Lite, Pro, and Institution Mode. This was followed by the introduction of the "Yala RealYield" marketplace on April 4, 2025, a platform designed to consolidate RWA yields within the ecosystem. ^[1]

The Yala Mainnet was launched on May 16, 2025, enabling the core functionality of the protocol for public use. Later that month, on May 30, 2025, Yala Labs published the project's comprehensive whitepaper, titled "Yala: A Bitcoin-Native Asset Liquidity Protocol," which detailed its technical architecture, economic models, and long-term vision. ^{[1] [3]}

In the third quarter, the project focused on user engagement initiatives. The Yala Loyalty Program was launched on September 23, 2025, introducing a rewards system for active participants. A promotional period for this program, offering double rewards, was scheduled to run until December 8, 2025. This date was also set as the deadline for a "Season 2 Snapshot," which would determine user eligibility for an upcoming airdrop event. The total allocation for this airdrop was announced to be 5% of the total token supply. ^[1]

Technology

Yala's technical design is a modular architecture built to leverage Bitcoin's security while enabling complex financial logic, often through off-chain computation and interoperability with other blockchains.

Architectural Design

The protocol is structured in four distinct layers:

• Settlement Layer: The Bitcoin mainnet serves as the ultimate layer for security and transaction finality. Final state changes from the protocol's operations are recorded as UTXO transactions on the Bitcoin blockchain.
• Execution Layer: Yala uses a hybrid execution model. Complex transaction logic and state changes occur either on an external, Turing-complete "target chain" or are managed by off-chain nodes known as Provers. This approach circumvents the scripting limitations of the native Bitcoin network.
• Consensus & Data Availability (DA) Layer: This layer relies on a network of off-chain Prover nodes to achieve consensus on state updates before they are settled on Bitcoin. The project plans to integrate a Bitcoin-native DA solution, such as Nubit, to create a decentralized Prover network and ensure the availability of off-chain state data.
• Application Layer: This is the user-facing layer containing the various DeFi modules, including lending protocols, the $YU liquidity asset, restaking, and yield farming applications.

This modular design is intended to overcome Bitcoin's inherent limitations, such as its lack of Turing-completeness and limited scalability, by offloading complex computations while retaining the Bitcoin network as the anchor for asset security. ^[3]​

Core Components

Several key components facilitate the protocol's functionality:

• **YU` into a reserve pool. The asset is designed with a Peg Stability Module (PSM) to help maintain its value.
• MetaMint and Yala MetaVault: MetaMint is the core protocol feature that governs the minting process of the $YU token. The Yala MetaVault is a central component of the security architecture, designed for the secure management of user assets within the protocol.
• Yala Bitcoin Bridge: This technology facilitates the connection between the native Bitcoin blockchain and the Yala ecosystem. It enables the use of actual BTC as collateral through mechanisms like atomic swaps and decentralized custodial mapping, where BTC is locked in a UTXO on the Bitcoin mainnet and a corresponding mapped asset is created on a target chain.
• Yay-Agent: An AI-powered tool that functions as an automated yield farming strategist. It is primarily used in the protocol's "Lite Mode" to optimize returns for users by managing strategies, collecting rewards, and rebalancing portfolios automatically.

These components work together to provide a seamless experience for users to deploy their Bitcoin in various yield-generating strategies. ^{[2] [3]}​

Economic Stability Mechanisms

To ensure solvency and stability, Yala incorporates several automated economic mechanisms:

• Automatic Stabilizer: This system is designed to manage the price stability of $YU and the circulating supply of both $YU and $YALA tokens. It operates through a dual-auction system that is triggered during liquidation events.

  • Surplus Auction: When the protocol accumulates excess funds from fees or interest payments, it auctions this surplus to independent actors called Keepers. Keepers bid for the surplus using $YALA tokens, which are then removed from circulation, creating deflationary pressure.
  • Debt Auction: If a liquidation results in a system deficit, the protocol auctions off the debt. The winning bidder covers the debt in $YU and is compensated with newly minted $YALA from a reserve pool, thereby recapitalizing the system.

• Liquidation Process: Liquidations are triggered when a borrower's collateral value falls below a predetermined minimum collateralization ratio. Keepers monitor the protocol for such positions and can initiate the liquidation process by purchasing the under-collateralized debt at a discount. This action unlocks the collateral UTXO and transfers it to the Keeper, ensuring the protocol remains solvent.

• Oracle Security Module (OSM): To defend against oracle manipulation attacks, Yala's design includes an OSM. This module introduces a 30-minute delay on price feeds used by the protocol, giving participants time to react to anomalous price movements before they can be used to trigger unfair liquidations.

These mechanisms are designed to maintain the economic equilibrium of the protocol through market-based incentives. ^[3]​

Optional Features

The protocol also includes optional systems for enhanced risk management:

• Takaful (Insurance Model): Yala offers an optional insurance system to protect borrowers against the risk of liquidation. The model is based on the Islamic finance concept of Takaful, where participants contribute to a mutual pool to insure one another. The system is managed by third-party Insurers and includes a reserve fund, the Qard Hasan Module, which can provide interest-free loans to the main insurance pool during periods of high claims. ^[3]

Tokenomics

The Yala ecosystem utilizes two primary tokens: $YU, a liquidity asset, and $YALA, the native protocol token.

$YU Token

The $YU token is a stablecoin or liquidity asset that is central to the Yala protocol. Its primary purpose is to unlock cross-chain liquidity from users' Bitcoin holdings, allowing it to be used for generating yield in various DeFi protocols and RWA marketplaces. Users mint $YU by depositing Bitcoin as over-collateralization into a Yala Vault. The protocol aims to maintain the stability of $YU through its over-collateralization requirement and its built-in Peg Stability Module. As of late 2025, the total supply of $YU was approximately $124.88 million, with advertised yields reaching up to 59.75% in certain strategies. ^{[1] [3]}

$YALA Token

The $YALA token is the native utility and governance token of the protocol. It plays a crucial role in the economic stability mechanisms, particularly the surplus and debt auctions managed by the Automatic Stabilizer.

• Ticker: YALA
• Blockchain: BNB Smart Chain
• Token Standard: BEP-20
• Contract Address: 0xf970706063b7853877f39515c96932d49d5ac9cd
• Max Supply: 1,000,000,000 YALA
• Total Supply: 1,000,000,000 YALA
• Circulating Supply: Approximately 246,360,000 YALA as of October 2025.

The YALA token is traded on both decentralized exchanges like PancakeSwap and several centralized exchanges, including Gate, MEXC, and BitMart. ^[4]

Ecosystem and Features

Yala's ecosystem is designed to cater to a wide range of users through distinct modes and features that provide access to various yield opportunities.

User Modes

The protocol offers three tailored user experiences:

• Lite Mode: Aimed at retail users and those new to DeFi, this mode offers a simplified, one-click process for earning yield. It features automated strategies managed by the AI-powered "Yay-Agent," which handles yield farming, reward collection, and rebalancing. This mode is designed to have no liquidation risk due to strict Loan-to-Value (LTV) ratios and offers a fixed Annual Percentage Rate (APR), which was advertised at 12% during certain phases.
• Pro Mode: Designed for experienced DeFi users, yield farmers, and arbitrage traders, this mode provides full manual control over investment strategies. Users can select and manage their positions, engage in complex arbitrage, and manage assets across multiple wallets and blockchain ecosystems.
• Institution Mode: This mode is tailored for institutional clients and high-net-worth individuals. It provides a self-custodial solution for native BTC, eliminating third-party custody and rehypothecation risks. It offers a predictable, fixed Annual Percentage Yield (APY) with zero liquidation risk and is designed to be compatible with major institutional custodians.

These distinct modes allow the protocol to serve different market segments with varying levels of risk tolerance and technical expertise. ^{[4] [1]}​

Yala RealYield and Loyalty Program

The Yala RealYield feature is a structured marketplace designed to consolidate RWA yields and make them accessible to protocol users. This component is central to Yala's mission of bridging Bitcoin liquidity with off-chain, institutional-grade investment opportunities. ^[1]​

To incentivize participation, Yala launched the Yala Loyalty Program, a gamified rewards system where users earn points called "Berries" for their activity within the protocol. The program includes interactive events like "Team Ups" and "Lucky Draws," as well as special promotions such as the "Double Berries" campaign to reward long-term users. These rewards are tied to events like a planned airdrop, further encouraging user engagement. ^{[2] [1]}​

Team

The founders of the Yala project have remained anonymous. However, the team is described as a combination of crypto-native developers and professionals from traditional finance. The team's collective experience reportedly includes former protocol architects from MakerDAO, ex-engineering leads from the stablecoin issuer Circle, cloud infrastructure and security specialists from Microsoft, and derivatives traders from Capital One with expertise in RWA markets. ^[2]​

Partnerships and Backers

Yala is supported by a number of venture capital firms and investment groups within the cryptocurrency industry. Its backers include Ethereal Ventures, Polychain Capital, Galaxy, Anagram, Amber, ABCDE Capital, Lago, GeekCartel, Hashey, L2IV, Satoshi Lab, UpHonest Capital, UTXO, and 280 Capital. The project has also established a network of ecosystem partners across various sectors, including Custody, DeFi, Infrastructure, Payment, RWA, and Stablecoins. ^[1]​