What is YieldBasis (YB)?

Deep Dive

1. Purpose & Value Proposition

YieldBasis solves the critical DeFi problem of impermanent loss (IL) for liquidity providers. By pairing deposited assets (e.g., BTC) with borrowed crvUSD stablecoins in Curve pools, the protocol maintains a 2× leverage ratio. This mechanism ensures LP positions mirror the underlying asset’s price movements 1:1, while earning fees from the Curve pool.

This allows Bitcoin or Ethereum holders to generate yield without exposure to IL, a key barrier to long-term liquidity provision in traditional AMMs (YieldBasis Docs).

2. Technology & Architecture

Built on Curve Finance’s infrastructure, YieldBasis employs:
- Rebalancing-AMM: Automatically adjusts leverage via arbitrage when asset prices fluctuate.
- VirtualPool: Mimics a traditional AMM pool to facilitate rebalancing without disrupting the Curve ecosystem.
- Collateralized Debt Positions (CDPs): Borrows crvUSD against LP tokens to maintain leverage, creating a self-sustaining loop (Blockworks).

3. Tokenomics & Governance

YB’s 1 billion token supply powers:
- veYB Governance: Locking YB tokens grants voting rights over emissions, fee structures, and protocol upgrades.
- Dynamic Fees: Admin fees increase non-linearly as more LPs stake, rewarding long-term governance participants.
- Emission Control: Liquidity mining follows an exponential decay curve, capped by the GaugeController contract to prevent inflation.

Conclusion

YieldBasis reimagines liquidity provision by combining leveraged yield strategies with community-driven governance. Its success hinges on a critical question: Can its rebalancing mechanisms scale efficiently as TVL grows across volatile markets?