YO Labs, the development team behind the YO Protocol, has raised $10 million in a Series A round to expand its crypto performance optimization platform.
Venture capital firm Foundation Capital led the round, along with Coinbase Ventures, Scribble Ventures and Launchpad Capital.
The San Francisco-based company plans to use the funds to bring its performance optimization protocol to more blockchains and improve its infrastructure.
The YO protocol is designed to help users earn returns on crypto assets by automatically rebalancing capital across multiple decentralized finance (DeFi) protocols while taking risk into account. It currently offers users access to yield products based on USD, EUR, BTC and gold.
Unlike most DeFi yield aggregators that operate within a single blockchain, YO’s system works across all chains. Its vaults (yoETH, yoUSD, yoBTC, yoEUR, and yoGOLD) dynamically allocate capital wherever the risk-adjusted return is most favorable, according to a press release shared with CoinDesk.
This is powered by Exponential.fi, a platform created by the same team to assign transparent risk scores to DeFi protocols. The protocol’s main innovation lies in its calculation of “risk-adjusted performance,” a metric derived from the team’s experience in creating risk ratings for DeFi pools, the protocol’s co-founder and CIO Mehdi Lebbar told CoinDesk in an interview.
Instead of chasing the highest advertised percentages, the system calculates a probability of default based on thousands of risk vectors, ranging from a protocol’s age to its code audit history.
To mitigate security vulnerabilities often associated with moving assets between blockchains, YO Labs employs a unique architecture that minimizes reliance on bridges, Lebbar said. Instead of constantly moving funds between chains, the protocol establishes what the team describes as “embassies”: independent vaults containing native assets on each blockchain.
“If you join a pool, you’re exposed to bridge risk… We needed to create these ’embassies’ on multiple planets, these vaults on multiple chains that contain native assets,” Lebbar said. “If you have USDC on Arbitrum, it’s the same USDC as on Ethereum, and you no longer have the bridge in the middle… that’s much more secure.”
Beyond the architecture, the system employs a ‘DeFi graph’ to manage active risks during market volatility or protocol failures, what Lebbar calls ‘Armageddon scenarios’. This system monitors dependencies up to five levels deep, allowing the protocol to trigger automatic withdrawals if a pool is indirectly exposed to a failed asset, Lebbar said.
The funding round brings YO Labs’ total raised to $24 million, including a previous seed round led by Paradigm. With the new capital, the company is positioning YO as core infrastructure for fintechs, wallets and developers looking to build sustainable performance into their products.
