KEYTAKEAWAYS
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YieldBasis, created by Curve founder Michael Egorov, introduces a 2× leveraged AMM design that mathematically eliminates impermanent loss while preserving on-chain BTC yield.
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The protocol integrates deeply with Curve’s crvUSD system and partners with Kraken and Legion to combine compliance, reputation-based access, and decentralized liquidity.
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By turning BTC into an active yield asset, YieldBasis aims to build the foundation of AMM 2.0—where leverage, liquidity, and sustainability coexist through programmable rebalancing.
CONTENT
ORIGIN AND VISION: WHY EGOROV IS REBUILDING AMM
In the history of decentralized finance, few builders have shaped market structure as deeply as Michael Egorov. The physicist-turned-founder built Curve Finance, a protocol that turned stablecoin trading into a predictable, efficient backbone of DeFi. For many, Curve was not just another AMM—it was a proof that mathematics could tame liquidity.
But in 2025, Egorov returned with a new idea—and a bigger ambition. His latest project, YieldBasis, is not a trading venue. It is an attempt to remove one of DeFi’s oldest inefficiencies: impermanent loss (IL).
For years, LPs on AMMs have carried a hidden cost. Even if prices moved in their favor, they could still lose value compared to simply holding the asset. Egorov called it “DeFi’s invisible tax.”
YieldBasis challenges that logic. Instead of reducing risk through hedging, it redefines the structure itself. By introducing constant leverage and automatic rebalancing, Egorov believes AMMs can evolve into “yield engines” rather than “price exposure machines.” He once summarized it simply: “When leverage stays constant, impermanent loss mathematically disappears.”
For him, YieldBasis is more than another protocol. It is an effort to make liquidity sustainable—to turn AMM yield into something predictable, transparent, and mathematically fair. In many ways, it is Curve’s philosophical sequel.
MECHANISM AND INNOVATION: HOW LEVERAGED LIQUIDITY REMOVES LOSS
At its core, YieldBasis is a structured yield system for BTC on-chain. Users deposit wrapped Bitcoin (such as WBTC or cbBTC), and the protocol automatically borrows an equal amount of crvUSD, forming a 2× leveraged symmetric position. This creates a 50:50 BTC–crvUSD liquidity pool. The protocol’s rebalancing AMM maintains that ratio continuously, while the system mints ybBTC tokens representing each user’s share.
ybBTC is the beating heart of YieldBasis. It tracks BTC price one-to-one, without the “square-root” exposure typical in AMMs. When BTC rises, the protocol expands the leveraged position by minting more LP tokens. When BTC falls, it reduces exposure automatically. Arbitrage and internal rebalancing keep the leverage constant, making the LP position move linearly with BTC instead of curving down with volatility.
In theory, that means no impermanent loss—the LP behaves as if simply holding BTC, while still earning trading fees.
The protocol adds a second layer: dual yield paths. LPs can choose between two reward models:
Real-time yield, receiving BTC-denominated trading fees directly.
Token yield, giving up fees in exchange for YB tokens minted as rewards.
This design ties token issuance to actual protocol performance. During bull markets, more users stake ybBTC to earn YB, strengthening liquidity and lowering sell pressure. In bear markets, users switch back to BTC-based income, keeping value circulation healthy. It is a feedback loop between real yield and token incentives—a self-balancing mechanism designed for long-term stability.
Underneath, the contracts are written in Vyper, like Curve. The rebalancing AMM and external arbitrageurs ensure constant leverage. Half of all trading fees cover rebalancing costs and interest payments, while the rest is shared between LPs and veYB holders—those who lock YB for governance and fee rights. In essence, YieldBasis turns liquidity provision into an automated, leveraged asset-management system—a fusion of math, incentive design, and behavioral economics.
ECOSYSTEM AND CAPITAL: THE THREE-WAY SYNERGY OF CURVE, KRAKEN, AND LEGION
If Curve was Egorov’s first universe, YieldBasis is his second constellation. And this time, he is not alone.
Curve DAO granted the protocol a $60 million crvUSD credit line, receiving 10% of YB’s total supply in return—a deep strategic integration rather than a loose partnership. The project itself is built and operated by Swiss Stake AG, a development entity led by Egorov and former Curve engineers, ensuring technical continuity and governance alignment.
On the financing side, YieldBasis chose a hybrid model of compliance and community. Through Kraken and Legion, the project raised about $5 million, with a $200 million valuation. Kraken provided regulatory and global distribution support, while Legion introduced its Legion Score reputation system—a credit-based access model that prioritized real users over capital whales. A total of 100 million YB were issued in the first sale (about 2.5% of total supply).
Soon after launch, YB was listed on Binance, OKX, and Coinbase, with trading volume surpassing $176 million in 24 hours and the token peaking at $0.81 before stabilizing near $0.47.
Security-wise, the protocol underwent six independent audits by Statemind, Quantstamp, ChainSecurity, MixBytes, and others. A multi-signature “circuit breaker” controlled by Curve DAO can freeze pools during emergencies—a protective layer against systemic risk.
Beyond the audits and listings lies the real story: YieldBasis is merging three worlds—Curve’s stability engine, Kraken’s compliance network, and Legion’s community trust model—into one interconnected ecosystem. It transforms BTC from a passive store of value into an active yield asset, extending Curve’s stablecoin philosophy to the largest crypto asset of all.
RISK AND OUTLOOK: CAN YIELDBASIS REDEFINE ON-CHAIN YIELD?
YieldBasis forces DeFi to revisit an old question: Can yield exist without risk?
Mathematically, Egorov’s model eliminates impermanent loss. But in practice, risk is never gone—it only changes shape. When markets are volatile, rebalancing costs and interest payments may exceed trading fees. When liquidity dries up, arbitrage becomes less efficient. In such cases, LP returns could still turn negative, even if BTC price moves favorably.
Moreover, the protocol’s foundation relies on crvUSD. If crvUSD faces liquidation cascades or collateral failure, YieldBasis would feel the shock immediately. It externalizes stability risk to Curve’s stablecoin system—powerful, but not immune.
Egorov himself has acknowledged these realities. For him, YieldBasis is not about creating a zero-risk system, but about making risk quantifiable and programmable. It is a continuation of his broader vision: a DeFi infrastructure where every outcome is visible, measured, and governed by code rather than chaos.
As of October 2025, YieldBasis holds about $150 million TVL on Ethereum. The team plans to expand to Arbitrum, Polygon, and Optimism, each with its own YB governance token to avoid cross-chain bridge risk. If successful, this modular, multi-chain design could turn YieldBasis into a backbone for decentralized yield—an AMM 2.0 standard where leverage, liquidity, and yield coexist in mathematical harmony.
“YieldBasis isn’t chasing high returns,” one analyst wrote on Cointelegraph. “It’s giving Bitcoin a financial life on-chain.”
That might be Egorov’s true legacy—not another DeFi experiment, but a new foundation for sustainable yield in the decentralized economy.
