The decentralized finance (DeFi) space continues to evolve, with innovation targeting some of its most persistent challenges. Among them, impermanent loss remains a major concern for liquidity providers (LPs), discouraging broader participation in yield-generating protocols. Now, Michael Egorov—the founder of Curve Finance—is stepping forward with a new project called Yield Basis, designed to tackle this very issue head-on. Backed by $5 million in funding and boasting a $50 million valuation, Yield Basis aims to redefine how users earn yield on their crypto assets—especially Bitcoin (BTC) and Ethereum (ETH).
This initiative isn’t just another spin-off; it’s a strategic evolution built on Curve’s proven infrastructure, leveraging advanced AMM mechanics and integrated leverage strategies to enhance returns while minimizing risk exposure. As the DeFi ecosystem matures, solutions like Yield Basis could play a pivotal role in driving sustainable liquidity and long-term user engagement.
A Strategic Fundraising Success: $5M Raised at $50M Valuation
Yield Basis recently completed a successful fundraising round, securing $5 million** with a pre-token valuation of **$50 million. The capital was raised through the sale of its native $YB token, with 10% of the total 1 billion supply—100 million tokens—offered to investors.
According to insiders, demand far exceeded expectations, with the round oversubscribed by more than 15x and finalized within just two weeks. Investor interest underscores growing confidence in Egorov’s vision and the technical foundation rooted in Curve’s ecosystem. Tokens allocated to investors will be subject to a six-month lock-up period, followed by a two-year linear unlock schedule—aligning incentives for long-term growth.
$YB Tokenomics: Building a Sustainable Ecosystem
At the heart of Yield Basis lies the $YB token, which plays a central role in governance, incentives, and ecosystem alignment. The distribution is carefully structured to ensure decentralization, ongoing development, and deep integration with the Curve ecosystem:
- 30% to community incentives – Distributed via liquidity mining programs to reward early adopters and active participants.
- 25% to the core team – Allocated to developers and contributors, vested over time to support long-term commitment.
- 15% to development reserves – Reserved for future upgrades, audits, and protocol improvements.
- 10% for Curve technology licensing – May be used to acquire voting rights in crvUSD stable pools, strengthening synergy with Curve.
- 10% for partnership initiatives – Dedicated to collaborations that expand the protocol’s reach and utility.
Notably, the allocation toward Curve technology licensing signals a strategic move to deepen integration within the broader Curve ecosystem. By potentially purchasing voting power in crvUSD pools, Yield Basis can influence protocol parameters that benefit both platforms—creating a positive feedback loop between yield optimization and ecosystem stability.
How Yield Basis Tackles Impermanent Loss
Impermanent loss occurs when the value of deposited assets in a liquidity pool diverges due to price volatility, leading LPs to experience unrealized losses—even if transaction fees provide some offset. This has long been a deterrent for retail and institutional participants alike.
Yield Basis introduces an innovative approach combining leveraged liquidity positioning and intelligent capital allocation:
Leveraged Liquidity Strategy
The protocol enables LPs to borrow crvUSD, Curve’s over-collateralized stablecoin, to double their effective liquidity position. For example, an ETH depositor can use borrowed crvUSD to create a 2x leveraged ETH/crvUSD pool position. This amplifies exposure and increases fee earnings proportionally—potentially doubling returns from trading fees.
However, leverage introduces risks such as liquidation and rebalancing costs. To mitigate these:
- Yield Basis employs Curve’s CryptoSwap AMM technology, which concentrates liquidity around current market prices, improving capital efficiency and fee accrual.
- A portion of trading fees and crvUSD borrowing interest is redirected to cover rebalancing expenses, ensuring system resilience during volatile markets.
This hybrid model balances enhanced yields with risk controls, making it particularly suitable for high-liquidity, low-volatility asset pairs like BTC and ETH.
Targeting High-Value Assets: BTC and ETH Focus
Unlike generalized DeFi platforms that accommodate a wide range of tokens—including highly speculative meme coins—Yield Basis takes a focused approach. It targets holders of Bitcoin and Ethereum, two of the most established and widely held digital assets.
Backtesting data from January 2019 to November 2024 reveals compelling performance metrics:
- Average APR of 20.5% (2019–2024)
- 9% average APR during a more recent period (2023–2024)
- Peak returns reaching 60% APR during the 2021 bull market
These yields are achieved by tokenizing leveraged positions into ybBTC and ybETH, which represent automated yield-bearing positions. Holders earn trading fees passively and can further stake these tokens to gain additional rewards.
Crucially, this model performs best with relatively stable, high-market-cap assets. It is not optimized for volatile or low-liquidity tokens, reflecting a disciplined product strategy aimed at sustainability over hype.
Current Status: Test-in-Production Mode
As of now, Yield Basis operates in a “test-in-production” environment—meaning real user funds are being tested under live conditions, but full public launch details remain under wraps. Michael Egorov has emphasized that no further announcements will be made until the mainnet deployment is ready, highlighting a cautious, security-first development philosophy.
Independent audits, stress testing, and community feedback will likely precede any official rollout. Given the complexity of leveraged AMM mechanics and cross-protocol dependencies (especially with Curve), thorough validation is essential before broad adoption.
Core Keywords
- Yield Basis
- Impermanent loss
- Curve Finance
- DeFi liquidity
- $YB token
- Leveraged yield farming
- CryptoSwap AMM
- BTC ETH yield
Frequently Asked Questions (FAQ)
What is Yield Basis?
Yield Basis is a DeFi protocol founded by Michael Egorov, creator of Curve Finance. It aims to reduce impermanent loss and boost yields for liquidity providers using leveraged positions backed by crvUSD and powered by Curve’s AMM technology.
How does Yield Basis reduce impermanent loss?
By enabling users to take leveraged positions using borrowed crvUSD and concentrating liquidity via Curve’s CryptoSwap mechanism, Yield Basis improves capital efficiency and reduces exposure to price divergence—key drivers of impermanent loss.
What is the $YB token used for?
$YB serves as the governance and utility token of the Yield Basis ecosystem. It rewards liquidity providers, funds development, supports partnerships, and strengthens integration with Curve through technology licensing.
Is Yield Basis available on mainnet yet?
No. The protocol is currently in “test-in-production” mode. There is no confirmed mainnet launch date, and Egorov has stated no updates will be shared until deployment is complete.
Can I earn yield on meme coins with Yield Basis?
Not effectively. The protocol is optimized for major assets like Bitcoin (BTC) and Ethereum (ETH). High-volatility tokens such as meme coins are not well-suited for its current risk model.
How was Yield Basis funded?
The project raised $5 million through a private sale of $YB tokens at a $50 million valuation. The round was oversubscribed by over 15x, reflecting strong investor confidence.
The Road Ahead: A New Chapter in DeFi Innovation
Yield Basis represents more than just another yield aggregator—it’s a bold attempt to solve one of DeFi’s oldest problems using battle-tested infrastructure. By building on Curve’s foundation and focusing on high-quality assets, it offers a pragmatic path toward sustainable yield generation.
If successful, Yield Basis could become a cornerstone service within the Curve ecosystem, attracting billions in TVL and setting a new standard for efficient liquidity provision.