Michael Egorov, the innovative mind behind Curve Finance, has unveiled an exciting new decentralized protocol named Yield Basis, designed to offer a sustainable yield on Bitcoin (BTC) while addressing the long-standing issue of impermanent loss (IL) in decentralized finance (DeFi). This groundbreaking initiative comes in response to the limited on-chain earning opportunities that Bitcoin holders have historically faced, where lending markets barely exceed minuscule interest rates and automated market maker (AMM) pools can expose users to the risk of losing value when asset prices fluctuate.
“Yield Basis reengineers the AMM model, allowing for deeper Bitcoin liquidity on-chain and presenting more appealing yield opportunities for institutional and professional investors,” Egorov asserts.
Yield Basis aims to eliminate IL risk entirely, creating a more stable environment for yield generation. To kickstart its journey, the protocol has introduced three pools, each capped at $1 million in deposits. Drawing from Curve’s five years of infrastructure development, Yield Basis employs a vote-escrow mechanism (veYB) for governance. This approach requires token holders to lock up their YB tokens to take part in protocol governance and collect fees, which are distributed in Curve’s crvUSD stablecoin or wrapped Bitcoin.
In a shift away from traditional DeFi models, Yield Basis ties token emissions to position yield rather than simply rewarding liquidity providers. This “value-protecting” strategy reflects Egorov’s commitment to fostering a sustainable ecosystem. Following a successful fundraising round that raised $5 million in early 2025, Yield Basis has also positioned itself as the inaugural project on the Legion and Kraken launchpad, marking a significant step in expanding access for the community to participate in its token sale.
While the focus is currently on Bitcoin, Egorov envisions broader applications for the protocol’s impermanent loss solutions, potentially extending to Ethereum, tokenized commodities, and even equities. This multifaceted approach may open the doors to a wider array of yield-bearing assets on-chain, paving the way for a new era in digital finance.
Yield Basis: A Sustainable Bitcoin Yield Protocol
Key Points:
- Founder and Launch: Michael Egorov, founder of Curve Finance, has launched Yield Basis.
- Purpose: Designed to provide sustainable bitcoin (BTC) yield while eliminating impermanent loss (IL).
- Challenge of Impermanent Loss: IL has been a major risk for users in decentralized finance, affecting value when token prices diverge.
- Current Yield Limitations: Bitcoin holders face limited on-chain return opportunities, typically yielding only 1-2%.
- Reengineering AMM Model: Yield Basis innovates on the automated market maker (AMM) model to remove IL risk.
- Enhanced Liquidity: Aims to enable deeper Bitcoin liquidity on-chain, attracting institutional and professional investors.
- Initial Pools: Three pools launched with a $1 million deposit cap each to manage early growth.
- Governance Mechanism: Adopts a vote-escrow mechanism (veYB) for governance, requiring users to lock YB tokens for participation.
- Value-Protecting Emissions: Token emissions are tied to position yield rather than simply given to liquidity providers.
- Funding and Launchpad: Secured $5 million in early 2025 funding; first project on the Legion and Kraken launchpad for token sale access.
- Future Scope: Potential to extend impermanent loss solutions to Ethereum, tokenized commodities, or stocks, broadening yield-bearing opportunities.
The developments in Yield Basis may lead to more secure investment opportunities for Bitcoin holders and could reshape yield-generation strategies in decentralized finance, impacting both individual and institutional investors.
Yield Basis: A Game Changer in Decentralized Finance
The emergence of Yield Basis, founded by Curve Finance’s Michael Egorov, addresses a significant hurdle in decentralized finance: impermanent loss (IL). This innovative protocol aims to offer sustainable bitcoin (BTC) yields while completely eliminating the risks associated with IL that have historically plagued investors in automated market maker (AMM) pools. Unlike conventional lending markets that provide scant returns, Yield Basis promises to revolutionize how Bitcoin holders engage with on-chain returns.
Competitive Advantages: Yield Basis’s unique approach is a major differentiator. By reengineering the AMM model, the protocol provides a risk-free environment for users, significantly enhancing liquidity for Bitcoin on-chain. This positions Yield Basis favorably against other DeFi protocols that have traditionally offered limited yield opportunities, often capped at 1–2%. The integration of governance through a vote-escrow mechanism (veYB) and the structure tied to position yield rather than simply liquidity provision further ensure a more sustainable growth model. These elements not only reward active participants but also potentially attract both institutional and professional investors seeking reliable yield-generating solutions.
Disadvantages: However, with innovation comes challenges. The initial $1 million cap on deposit pools may hinder scalability and limit participation for larger market players eager to embrace the protocol. Moreover, while Egorov’s model reduces IL risk, it remains to be seen how effectively it can translate to other assets beyond Bitcoin, such as Ethereum or tokenized commodities. The dependency on locking YB tokens for governance may deter some investors who prefer liquidity over long-term commitments.
This novel approach could significantly benefit active investors who prioritize capital efficiency and wish to leverage deeper liquidity without the fear of IL. Conversely, it may create challenges for traditional liquidity providers and existing DeFi protocols that may struggle to compete in a landscape where sustained yields and risks are balanced. As such, Yield Basis not only positions itself as a pioneering solution but also potentially reshapes the competitive dynamics within the decentralized finance arena.
