The DeFi world has long been plagued by Impermanent Loss, with countless liquidity providers suffering losses due to price fluctuations. As the founder of Curve Finance, Michael Egorov returns to the battlefield with his new work Yield Basis, aiming to fundamentally change this situation.
The protocol secured $5 million in funding at the beginning of 2025, with a valuation of up to $50 million, and was oversubscribed by 15 times in a short period, demonstrating the market’s high expectations for its solutions.
01 Kraken Launchpad Debut: A New Journey for the Established Exchange
In mid-September, the well-established exchange Kraken, in collaboration with the ICO platform Legion, is set to launch its token issuance platform Kraken Launch with its first project Yield Basis. This move marks Kraken as another mainstream exchange following Binance and OKX to enter the Launchpad business.
The debut of Kraken Launch carries the market’s dual expectations for technological innovation and wealth effect.
Looking back at the performance of other exchanges’ Launchpads, major exchanges have generated impressive returns through their Launchpads over the past year. Binance Alpha’s monthly average returns once exceeded 1500U, and if users held Binance Alpha, each participant was airdropped 1667 $MYX tokens, leading to returns that even approached 30,000U at the beginning of this month.
These data reflect the core logic of the market regarding the Launchpad of well-established exchanges: high-quality initial projects from reputable exchanges often attract significant liquidity premiums and attention, and this key information will translate into actual investment returns.
02 Yield Basis Project Origin: Solving Pain Points in the DeFi Field
Yield Basis, created by Curve Finance founder Michael Egorov, is one of the most anticipated projects in the DeFi space for 2025.
The protocol aims to address the longstanding issue in the DeFi space - Impermanent Loss.
In traditional AMM mechanisms, when prices fluctuate violently, it can lead to returns for liquidity providers that are significantly lower than those of directly holding the assets.
Data shows that when the price changes by 5 times, Impermanent Loss can reach 25%. This issue has plagued DeFi development for many years and has deterred many BTC holders from participating in liquidity mining.
The core value proposition of Yield Basis is to solve this problem, allowing BTC holders to participate in liquidity provision while being free from the worry of Impermanent Loss.
03 Core Mechanism: Dual Token System and Leverage AMM Model
The core innovation of Yield Basis lies in its redesigned Automated Market Maker (AMM) model, aimed at eliminating Impermanent Loss, a long-standing pain point in the Decentralized Finance space.
Leverage AMM Model
The protocol adopts a 2x leverage liquidity strategy, doubling the liquidity position by borrowing Curve’s crvUSD stablecoin.
When users deposit wBTC worth 100 dollars, the protocol uses that wBTC as collateral to borrow crvUSD worth 100 dollars, and then deposits a total of 200 dollars worth of assets into the Curve wBTC/crvUSD liquidity pool.
This mechanism fundamentally eliminates Impermanent Loss by changing the relationship between the value of liquidity providers’ positions and the price of the underlying asset from √P to P through mathematical principles.
Dual Token System
Yield Basis adopts a dual-token design:
- ybBTC/ybETH: Derivative tokens representing users’ leveraged liquidity positions.
- YB: The governance token of the protocol, adopting a ve-tokenomics model similar to Curve.
Users can obtain ybBTC or ybETH by depositing BTC or ETH. These tokens automatically accumulate trading fees and can be further staked for additional rewards.
04 Token Economics: YB Token Model and Distribution Mechanism
The token economic model design of Yield Basis is intricate, integrating the veTokenomics experience of Curve and implementing targeted optimizations.
Token Allocation
The total supply of YB tokens is 1 billion, with an initial circulating supply of 87.9 million tokens (accounting for 8.79% of the total).
The token allocation plan is as follows:
- 30% allocated for community incentives, distributed through liquidity mining.
- 25% allocated to the team
- 15% as development reserve
- 10% for Curve technology licensing
- 10% for cooperation plan
- 5% as ecological reserves
- 2.5% for pre-sale
- 1.3% for Liquidity Provision
The team’s and investors’ tokens have a 6-month lock-up period, followed by a linear unlock over two years.
Governance Mechanism
YB adopts a voting escrow model (veYB), where token holders must lock YB to participate in governance and earn protocol fees.
veYB holders can earn up to 2.5 times the yield enhancement and protocol revenue sharing, which encourages long-term participation and reduces market selling pressure.
05 Public Sale Details: Schedule and Participation Guide
According to data released by Kraken, the total supply of the YB token is 1 billion, with 2.5% (25,000,000 YB) allocated for public sale. The fully diluted valuation (FDV) for the public sale is 200 million USD, and the price per token is fixed at 0.2 USD.
Sales Stage
The Yield Basis project launch consists of two phases:
- Presale Stage (Now Open): This stage is conducted on the Legion platform using a Merit-Based allocation mechanism, requiring users to connect their wallets and accounts from platforms like Twitter, Github, etc.
Legion will comprehensively calculate user scores based on on-chain account activity, social contributions, and code contributions, with high-scoring users receiving a larger allocation share at this stage.
- Public sale stage: It will be conducted simultaneously with the Legion and Kraken Launch, adopting a first-come, first-served approach open to all users who have completed KYC.
Specific schedule arrangement
- Legion Presale: Opened on the evening of September 29 and will last until 10 PM on September 30.
- The presale application results will be announced on October 1st at 9 PM.
- Public Sale Round: Kraken and Legion will open simultaneously at 10 PM on October 1st until the quota is exhausted.
It is important to note that the KYC processes on the Kraken and Legion platforms are relatively strict, requiring prior preparation of relevant identification and proof of residence documents, and users from certain regions (such as the United States, Canada, Australia, etc.) may not be able to participate in this new token offering.
06 Competitive Advantage: Solving the Core Pain Points of Decentralized Finance
Yield Basis has multiple differentiated advantages in the competitive DeFi space, giving it long-term development potential.
Impermanent Loss Solutions
The core advantage of the protocol lies in its innovative Impermanent Loss elimination mechanism.
With 2x leverage and dynamic rebalancing, Yield Basis allows LPs to earn trading fees without bearing the risk of Impermanent Loss, addressing a long-standing pain point in the DeFi space.
Background and Experience of Market Makers
Egorov, as the founder of Curve Finance, has extensive experience in AMM algorithm design and has successively launched the stableswap and cryptoswap algorithms.
The project inherits the resilience of Curve’s five-year infrastructure and has innovatively optimized it.
Diversified sources of income
Unlike many DeFi protocols that rely on a single yield strategy, Yield Basis diversifies its sources of income, including funding rate arbitrage, cross-exchange price arbitrage, and other strategies that market makers excel at.
This diversified revenue base allows it to potentially maintain stable returns under different market conditions.
07 Risks and Challenges: Complex Mechanisms and Market Uncertainty
Although Yield Basis has proposed innovative solutions, investors still need to be vigilant about the risks and challenges involved.
Technical Complexity Risk
The dynamic rebalancing mechanism of the protocol requires continuous monitoring of market prices and adjustment of positions, which increases the complexity of the system and potential operational risks.
Under extreme market conditions, the rebalancing mechanism may not work as expected, leading to positions deviating from the expected leverage ratio.
Market and Regulatory Risks
The YB token is 100% unlocked during the TGE, which minimizes the cliff effect, but increases the risk of short-term price volatility.
Like most crypto projects, Yield Basis faces a complex regulatory environment, and different jurisdictions may have varying classifications and regulatory requirements for its tokens.
Rely on the Curve ecosystem
Yield Basis is highly dependent on the Curve ecosystem, especially its crvUSD stablecoin and the Llama Lend lending protocol.
If there are problems in the Curve ecosystem, it may have a domino effect on Yield Basis.
08 Future Outlook: Expanding from Bitcoin to Diversified Assets
The future development roadmap of Yield Basis demonstrates its ambition to expand its application scope and influence.
Although the protocol initially focused on Bitcoin, Egorov stated that its Impermanent Loss solution could extend to Ethereum, tokenized commodities, and even stocks, potentially expanding the range of on-chain yield assets.
The protocol plans to gradually increase the deposit limit after launch. In the initial phase, each of the three liquidity pools has a deposit limit of $1 million to control system risks and allow for gradual expansion.
In the long run, Yield Basis aims to transform idle crypto assets into productive assets by creating the vision of a "Bitcoin Black Hole," significantly enhancing the on-chain BTC liquidity depth.
Future Outlook
As the token generation event on October 1 approaches, Yield Basis is sparking widespread discussion in the DeFi community. Its innovative leveraged AMM model and Impermanent Loss solution are indeed bringing new technological ideas to the DeFi space.
The market shows an optimistic attitude towards the Kraken Launch of $YB, with supporters represented by José Maria Macedo, the founder of Delphi Ventures, comparing YB to "the BTC version of Ethena," indicating Yield Basis’s innovation in Impermanent Loss solutions.
For investors, under the influence of FOMO emotions, it is particularly important to maintain rational analysis and risk control.
