YO Labs, the development team behind YO Protocol, has raised $10 million in a Series A round to expand its crypto yield 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 funding to bring its dividend optimization protocol to multiple blockchains and improve its infrastructure.
The YO protocol is designed to help users earn returns on cryptoassets by automatically rebalancing capital across multiple decentralized finance (DeFi) protocols while taking risk into account. It currently gives users access to USD, EUR, BTC and gold-based dividend products.
Unlike most DeFi dividend aggregators that operate within a single blockchain, YO’s system works across chains. Its vaults — yoETH, yoUSD, yoBTC, yoEUR and yoGOLD — dynamically allocate capital to where risk-adjusted returns are most favorable, according to a press release shared with CoinDesk.
This is powered by Exponential.fi, a platform built by the same team to assign transparent risk scores to DeFi protocols. The protocol’s core innovation lies in its calculation of “Risk Adjusted Yield,” a metric derived from the team’s background in building risk assessments for DeFi pools, protocol co-founder and CIO Mehdi Lebbar told CoinDesk in an interview.
Instead of chasing the highest advertised percentages, the system calculates a probability of breach based on thousands of risk vectors, ranging from a protocol’s age to its code revision history.
To mitigate the 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 across chains, the protocol establishes what the team describes as “embassies” – independent vaults with native assets on each blockchain.
“If you bridge a pool, you’re exposed to the risk of the bridge… We had to create these ’embassies’ across multiple planets, these vaults across multiple chains that hold 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… it’s much safer.”
In addition to the architecture, the system uses 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, enabling the protocol to trigger automatic withdrawals if a pool is indirectly exposed to a failing asset, Lebbar said.
The funding round brings YO Labs’ total raised to $24 million, including an earlier seed round led by Paradigm. With the new capital, the company is positioning YO as core infrastructure for fintechs, wallets and developers who want to integrate sustainable returns into their products.
