Yield Basis is a decentralized finance (DeFi) protocol designed to generate sustainable on-chain yield for Bitcoin holders. Founded by Curve Finance creator Michael Egorov and launched on September 26, 2025, the platform utilizes a reengineered Automated Market Maker (AMM) model intended to eliminate the risk of impermanent loss for liquidity providers. ^{[1] [2]}

Overview

Yield Basis was created to address two persistent challenges for Bitcoin holders within the DeFi ecosystem: historically low returns from lending and liquidity protocols, and the financial risk of impermanent loss (IL) associated with providing liquidity to traditional AMMs.

The protocol targets institutional and professional investors by offering a mechanism for earning yield on Bitcoin that is designed to be both safer and more attractive than existing options. The project's architecture borrows heavily from the design principles of Curve Finance, particularly its tokenomics model and infrastructure resilience. ^[2]

The protocol's core value proposition is its novel AMM, which is engineered specifically to mitigate the risks of IL, a common issue where liquidity providers experience a loss in asset value compared to simply holding the assets when the price of the tokens in a pool diverges. By aiming to eliminate this risk, Yield Basis seeks to attract deeper and more stable liquidity for Bitcoin on-chain. The project secured $5 million in a funding round in early 2025 and conducted its public launch through a partnership with Legion and Kraken. ^[2]

History

The development of Yield Basis culminated in a public launch on September 26, 2025. Earlier in the same year, the project successfully raised $5 million in a private funding round to support its development and launch. ^[2]

The protocol's official debut was marked by a token sale on the joint Legion and Kraken launchpad, making it the first project to launch on that platform. To manage initial capital inflows and ensure stability, the protocol went live with three initial liquidity pools. Each of these pools was subject to a deposit cap of $1 million, limiting the protocol's initial total capacity to $3 million. This controlled rollout was designed to allow the system to scale gradually while monitoring its performance in a live environment. ^{[1] [2]}

Technology

The technological foundation of Yield Basis is a proprietary Automated Market Maker model designed to address the specific needs of Bitcoin liquidity. Its design incorporates lessons learned from Curve Finance's five years of operation in the DeFi space. ^[2]

Core Architecture and Impermanent Loss Mitigation

Yield Basis operates on a reengineered AMM that differentiates it from standard constant-product or hybrid models. The primary innovation of this architecture is its stated ability to "eliminate IL altogether." Impermanent loss occurs in traditional AMMs when the price of a token in a liquidity pool changes relative to the other token(s). The greater the price divergence, the more the liquidity provider's share of the pool is worth less than if they had simply held the original assets. The specific mechanics of how Yield Basis achieves IL elimination have not been fully detailed, but the feature is central to its goal of providing a safer venue for Bitcoin liquidity. ^[1]

Incentive Model

The protocol employs an incentive system described by founder Michael Egorov as "value-protecting." This model is designed to be more sustainable than many DeFi protocols that rely on high, often inflationary, token emissions to attract liquidity. In the Yield Basis system, rewards distributed to liquidity providers are tied directly to the yield performance of their position. This approach aims to align the interests of users with the long-term health of the protocol by rewarding actual value generation rather than simply participation. ^[2]

Tokenomics

The economic model of Yield Basis is centered around its native token, YB, and a governance system inspired by Curve's vote-escrow mechanism.

YB and veYB Tokens

• YB: The native token of the Yield Basis protocol.
• veYB: The governance token, which is obtained by locking YB tokens. The "ve" stands for vote-escrowed.

Users must lock their YB tokens for a specified period to receive veYB. The amount of veYB received is proportional to the number of YB tokens locked and the duration of the lock. This model incentivizes long-term holding and active participation in the protocol's governance, as longer lock periods grant greater voting power and a larger share of protocol fees. ^[1]

Governance and Fee Distribution

Holders of veYB are granted two primary benefits:

1. Governance Rights: veYB holders can participate in protocol governance, voting on proposals that affect parameters, upgrades, and the overall direction of the platform.
2. Protocol Fees: A share of the fees generated by the protocol's liquidity pools is distributed to veYB holders.

These fees can be claimed by veYB holders in one of two assets: crvUSD, the stablecoin issued by Curve Finance, or Wrapped Bitcoin (wBTC). This provides token holders with a choice between receiving their rewards in a stable asset or in a token pegged to the value of Bitcoin. ^{[1] [2]}