Key Points:
• YO Labs raised $10 million to expand YO Protocol, a cross-chain DeFi yield optimization platform focused on risk-adjusted returns.
• The protocol automates capital allocation across blockchains while minimizing bridge risk through native vault architecture.
• YO is positioning itself as infrastructure for fintechs and developers as DeFi matures toward institutional-grade systems.
YO Labs has raised $10 million in a Series A funding round to accelerate the expansion of its cross-chain crypto yield optimization protocol, signaling growing institutional interest in infrastructure that brings risk-aware automation to decentralized finance.
The round was led by Foundation Capital, with participation from Coinbase Ventures, Scribble Ventures and Launchpad Capital. The San Francisco–based firm plans to use the capital to extend its protocol, YO Protocol, to additional blockchains and strengthen the underlying systems that manage capital allocation, risk assessment and security across DeFi ecosystems.
The raise comes as yield generation in crypto enters a more mature phase. After years of unsustainably high returns driven by incentives and leverage, investors and developers are increasingly focused on risk-adjusted performance, capital efficiency and infrastructure that can support long-term adoption.
Automating Yield Across Blockchains
YO Protocol is designed to automate yield generation by dynamically rebalancing user capital across multiple decentralized finance protocols and blockchains. Rather than locking users into a single chain or product, the system continuously evaluates where capital can earn the best risk-adjusted return.
The protocol currently supports yield products tied to U.S. dollars, euros, bitcoin and gold, offering exposure through vaults such as yoUSD, yoEUR, yoBTC and yoGOLD. These vaults allocate funds across chains and protocols based on changing market conditions, rather than static strategies.
Unlike traditional DeFi yield aggregators that operate within one blockchain, YO’s architecture is explicitly cross-chain. This allows it to tap into yield opportunities wherever they arise, while avoiding the fragmentation that has historically limited capital efficiency in DeFi.
Risk as the Core Differentiator
At the center of YO Protocol is a proprietary concept known as “risk-adjusted yield.” Instead of optimizing purely for headline returns, the system incorporates probabilistic risk modeling to determine whether a yield opportunity is worth pursuing.
This approach is powered by Exponential.fi, a risk analytics platform built by the same team. Exponential assigns transparent risk scores to DeFi protocols by evaluating thousands of variables, including protocol age, audit history, smart contract complexity and dependency exposure.
YO Labs co-founder and chief investment officer Mehdi Lebbar said the system calculates a probability of default for each pool, allowing the protocol to avoid yield that appears attractive on the surface but carries outsized downside risk. The goal is to produce more stable, institutional-grade returns rather than chase volatile incentives.
Rethinking Cross-Chain Security
Cross-chain activity has long been one of DeFi’s biggest vulnerabilities, with bridges accounting for a significant share of historical exploits. YO Labs addresses this risk through an architecture that minimizes reliance on bridges altogether.
Instead of continuously moving assets between chains, YO establishes what it calls “embassies” — native vaults deployed independently on each blockchain. These vaults hold assets locally, reducing exposure to bridge failures while still allowing the protocol to rebalance capital at a strategic level.
The system is further reinforced by what the team describes as a “DeFi Graph,” which maps dependencies between protocols and assets. During periods of stress, this allows YO Protocol to detect indirect exposure to failing components and automatically exit affected positions before losses cascade.
Infrastructure Play for the Next Phase of DeFi
The Series A brings YO Labs’ total funding to $24 million, following an earlier seed round led by Paradigm. With this capital, the company is positioning YO Protocol not as a consumer-facing product alone, but as core infrastructure for fintechs, wallets and developers seeking to embed sustainable yield into their platforms.
As DeFi shifts away from speculative excess toward utility and integration with broader financial systems, protocols that can abstract complexity while managing risk are increasingly valuable. YO Labs’ bet is that yield, when properly engineered, can become a dependable financial primitive rather than a cyclical trading strategy.
Leave a comment