YO Labs, the development team behind YO Protocol, has secured $10 million in a Series A funding round aimed at enhancing its cryptocurrency yield optimization platform.
The funding was led by venture capital firm Foundation Capital, with support from Coinbase Ventures, Scribble Ventures, and Launchpad Capital.
Based in San Francisco, the company intends to use the investment to extend its yield optimization protocol to additional blockchains and bolster its infrastructure.
YO Protocol assists users in earning returns on crypto assets by reallocating capital across various decentralized finance (DeFi) protocols while considering associated risks. It currently provides users access to yield products based on USD, EUR, BTC, and gold.
In contrast to most DeFi yield aggregators limited to a specific blockchain, YO’s system operates across multiple chains. Its vaults — yoETH, yoUSD, yoBTC, yoEUR, and yoGOLD — strategically distribute capital to the areas with the most advantageous risk-adjusted yields, as outlined in a press release shared with CoinDesk.
This functionality is driven by Exponential.fi, a platform developed by the same team that assigns transparent risk scores to DeFi protocols. The core innovation of the protocol lies in its calculation of “Risk Adjusted Yield,” a metric based on the team’s experience in developing risk ratings for DeFi pools, according to co-founder and CIO Mehdi Lebbar, who spoke with CoinDesk.
Instead of pursuing the highest advertised yield percentages, the system assesses the likelihood of defaults, taking into account thousands of risk factors, including a protocol’s age and audit history.
To address the security vulnerabilities typically associated with transferring assets between blockchains, YO Labs utilizes a distinctive architecture that reduces dependence on bridges, Lebbar explained. Rather than continually shifting funds across chains, the protocol sets up what the team refers to as “embassies” — independent vaults that hold native assets on each blockchain.
“When bridging a pool, you expose yourself to the risks of the bridge… We had to create these ’embassies’ across various chains that hold native assets,” Lebbar noted. “If you possess USDC on Arbitrum, it is the same USDC as on Ethereum, and you eliminate the bridge from the equation… that’s significantly safer.”
Apart from architecture, the system incorporates a ‘DeFi Graph’ to manage active risks during market turbulence or protocol breakdowns—situations Lebbar describes as ‘Armageddon scenarios.’ This system monitors dependencies up to five levels deep, enabling the protocol to initiate automated withdrawals if a pool is indirectly linked to a failing asset, as per Lebbar.
This funding round increases YO Labs’ total capital raised to $24 million, including an earlier seed round led by Paradigm. With these new resources, the company aims to position YO as essential infrastructure for fintechs, wallets, and developers eager to integrate sustainable yield into their offerings.
