Michael Egorov, founder of Curve Finance, has launched Yield Basis, a decentralized protocol designed to provide sustainable bitcoin (BTC) yield while eliminating impermanent loss (IL), a persistent challenge in decentralized finance (DeFi). Bitcoin holders have faced limited on-chain returns, with lending markets offering minimal yields and automated market maker (AMM) pools exposing users to IL risk. Yield Basis reengineers the AMM model to remove IL entirely, aiming to deepen Bitcoin liquidity and attract institutional investors.
Initially, three pools launched with a $1 million deposit cap each, leveraging a vote-escrow mechanism (veYB) for governance. Token holders must lock YB to participate and earn fees in crvUSD or wrapped Bitcoin. Token emissions are tied to position yield, described as a value-protecting model. The protocol secured $5 million in early 2025 funding and debuted on the Legion and Kraken launchpad.
In support, Curve DAO approved a $60 million credit line in crvUSD for Yield Basis ahead of its mainnet launch. The credit will fund pools for WBTC, cbBTC, and tBTC on Ethereum, initially capped at $10 million per pool, to expand Curve's ecosystem and boost fee flows for veCRV holders. However, concerns were raised by community member Small Cap Scientist about risks, lack of TVL-based caps, and transparency. Egorov defended the proposal, citing six audits and an emergency stop mechanism, assuring that Yield Basis would handle any exploits.