Avalon Finance stands as a decentralized lending protocol constructed on Merlin Chain, consisting of three integral components. Firstly, it offers overcollateralized lending, providing users with a mechanism to borrow funds while securing the loan with more than the borrowed amount in collateral. Secondly, Avalon Finance facilitates derivatives trading linked to lending, allowing users to engage in derivative contracts tied to the underlying lending activity. Lastly, the protocol introduces an algorithmic stablecoin based on lending, leveraging lending activities to maintain stability and peg the value of the stablecoin.