1. YB Project Overview: Background and Core Objectives
Yield Basis (YB), founded by Curve’s Michael Egorov, is a new DeFi protocol created to deliver on-chain yield solutions for Bitcoin holders.
One of the core objectives is to eliminate impermanent loss (IL). In AMM models, liquidity providers (LPs) often earn less than simply holding assets due to losses from rebalancing when prices shift. Yield Basis has designed a novel AMM to minimize price risk for liquidity providers (LPs).
To jumpstart initial liquidity, Curve DAO has authorized a $60 million crvUSD credit line for Yield Basis, providing capital to BTC-related pools.
2. Launch Process and Pricing Mechanism
As the flagship offering on Kraken’s new Launch platform, Yield Basis is conducting a public sale of YB tokens on the Kraken and Legion platform.
- Public sale price: $0.20 per YB.
- Total supply: 1 billion YB, with 2.5% (25 million) available in the public sale.
- Fully Diluted Valuation (FDV): $200 million.
- Two-phase sale: Phase one gives priority to Legion platform users; phase two is open to all on a first-come, first-served (FCFS) basis.
- TGE unlock: 100% unlocked at launch, with immediate trading.
3. Technical Innovation: How YB “Eliminates Impermanent Loss”
Impermanent loss is a persistent challenge for traditional AMMs. Yield Basis addresses this through several key innovations:
- Leverage and lending mechanism: The protocol internally borrows the counter asset, keeping LP positions near a 50/50 ratio to reduce rebalancing losses.
- Fee allocation and rebalancing costs: A portion of trading fees is reserved to fund rebalancing, offsetting lending interest and slippage.
- Pool caps: Initial limits help prevent extreme liquidity imbalances and associated risks.
- veYB governance and incentives: Users who lock YB into veYB can participate in protocol governance and share in fee distributions.
However, while the protocol aims to “eliminate” impermanent loss, it cannot guarantee zero risk under all market conditions.
4. Tokenomics & Governance Mechanism
YB’s tokenomics and governance structure are key to evaluating the project’s long-term viability:
- Distribution: 1 billion YB total supply, with 2.5% for public sale. The remainder is allocated to the team, ecosystem, incentives, and reserves.
- Curve DAO authorization fees and protocol fees: Yield Basis pays authorization fees to Curve DAO, with some benefits distributed to veCRV holders.
- Governance lock: Locking YB as veYB enables users to participate in governance and earn fee dividends.
- Credit facility and pool launch: Curve DAO has approved a $60 million crvUSD credit facility to support the initial BTC pools.
5. Risks and Controversies
- Economic model risk: The key challenge is whether rebalancing and lending costs can be covered by trading fees.
- Transparency and concentration: Some community members are concerned about potential conflicts of interest in governance voting.
- Security responsibility: The protocol must clearly define responsibility in the event of bugs or attacks.
- Price volatility: Despite media reports of 100% TGE unlock, market prices may remain highly volatile.
6. Advice for New Participants
- Review audit reports and community feedback to strengthen your security posture.
- Read all rules thoroughly and note sale times, unlock policies, and fee structures.
- Start with small allocations; avoid large, all-in positions.
- Set clear profit-taking and stop-loss levels in advance to avoid passive risk exposure.
7. Summary: Is YB Worth Your Attention?
As Kraken Launch’s first project, Yield Basis commands significant interest. It addresses a core challenge in AMMs and creates new on-chain yield opportunities for Bitcoin holders.
The model still requires real-world market validation to demonstrate its stability. Innovative investors may find YB worth watching. Conservative investors might prefer to wait and see before making a move.
