The Big Move: A New Project to Solve an Old Crypto Problem
Michael Egorov, the mastermind behind Curve Finance, is at it again. This time, he’s launching Yield Basis, a project that could change the game for crypto liquidity providers. The goal? To eliminate impermanent loss, a nightmare for anyone providing liquidity on decentralized exchanges (DEXs). Investors are already excited—Yield Basis raised $5 million in just two weeks at a $50 million valuation, proving there’s serious demand for this idea.
What’s Impermanent Loss & Why Should You Care?
Imagine you put some Bitcoin and USDT into a liquidity pool to earn trading fees. But instead of gaining, you realize you’d have made more money by just holding your BTC in your wallet. That’s impermanent loss—a risk where liquidity providers end up with less than they started with, even after earning fees.
Yield Basis wants to fix this problem using automated market makers (AMMs) and leverage. If it works, it could double liquidity provider rewards and make DeFi more profitable and less risky.
How Does Yield Basis Work? A Simple Breakdown
- Leverage Liquidity (2x Boost) – Liquidity providers use Curve Finance’s stablecoin (crvUSD) to borrow funds and double their position in a liquidity pool (like BTC/USD).
- Modify AMM Ratios – This adjusts how liquidity moves, which could eliminate impermanent loss.
- Concentrated Liquidity = Higher Fees – Instead of spreading liquidity thin, Yield Basis focuses it where trading is most active, increasing fee earnings.
- Rebalancing Costs? Covered! – Borrowers pay interest in crvUSD, which funds rebalancing and keeps the system profitable.
If it all plays out as planned, Yield Basis liquidity providers could make more money while taking on less risk.
Why is This a Big Deal?
- Huge Demand: Investors oversubscribed the funding round by 15x—meaning people were willing to invest way more than the $5M cap.
- Potential for Billions: If Yield Basis works, it could manage “tens of billions” in liquidity and become a major player in DeFi.
- Better Yield for BTC & ETH Holders: Backtesting shows an average APR of 20.5% since 2019, with peaks of 60% in bull markets.
The Risks & The Reality
Yield Basis sounds promising, but it’s not guaranteed to work. Managing leveraged liquidity is tricky—borrowing and rebalancing costs can eat into profits. Egorov admits it works best with “blue-chip” assets like BTC & ETH, but may struggle with volatile coins like memecoins.
Final Take: A Bold Bet on DeFi’s Future
Yield Basis could be a breakthrough for liquidity providers, making DeFi more rewarding and sustainable. But execution and adoption will determine its success. If Egorov’s vision holds up, Yield Basis might be the next big thing in crypto. If not, it’s just another failed experiment in DeFi history.
