The post Yield Basis wants to be DeFi’s ‘Bitcoin black hole’ appeared on BitcoinEthereumNews.com.

This is a segment from the 0xResearch newsletter. To read full editions, subscribe. Michael Egorov is no stranger to token incentive mechanisms. As the founder of Curve, he pioneered vote-escrow (ve) tokenomics to juice the growth of the stablecoin AMM. But his new protocol, Yield Basis, is built for a different kind of user: “people who want to earn something on mostly Bitcoin,” as Egorov told Blockworks. At its core, Yield Basis is an attempt to eliminate LP impermanent loss by leveraging liquidity. Egorov explains: “If you leverage liquidity by a factor of two and keep this leverage, then the pricing of liquidity which gives you impermanent loss actually disappears.” The result, he says, is LP positions that behave like spot BTC exposure — with none of the usual downside when prices move violently. The mechanism builds on Curve’s liquidity pools, but with key upgrades. Egorov has engineered the system to “re-leverage” automatically, keeping the 2x ratio constant. “It’s very important to keep this ratio very, very precise,” he said, noting that “a special AMM will do it for you.” That precision, he argues, is what distinguishes Yield Basis from Fluid. “From what I understand, [Fluid is] doing it rather manually,” he said. “They’re earning a lot in fees, but they are losing more when this process of moving the range happens.” With Yield Basis, by contrast, the rebalancing logic is automated and driven by arbitrage, preserving capital value in BTC terms. “You want your number of bitcoin to smoothly go up rather than ever go down.” Of course, there are new protocol tokens involved. And the tokenomics design is no less ambitious. LPs must choose: Either earn real BTC-denominated yield from trading fees, or forgo that income in exchange for emissions of the protocol’s first native token, $YB. “We…

---

Filed under: News - @ April 22, 2025 5:26 pm