How Yield Basis Turns Bitcoin Volatility into Up to 30% APR
Yield Basis removes the impact of impermanent loss (IL) in liquidity pools and lets BTC holders earn double‑digit yields while maintaining full, 1:1 exposure to Bitcoin. Through a modified AMM, 2× leverage, and concentrated liquidity, market volatility is converted into income for LPs.
This article explains Yield Basis’s architecture, the YB tokenomics, practical use cases, and risk profile—so you can see who the protocol suits and how to use it without unnecessary complexity.
| ⚡ APR | 💰 Pools | 📊 TVL Cap | 🔗 Network |
|---|---|---|---|
| ~15–20% up to 50%+ during high activity | WBTC / cbBTC / tBTC vs crvUSD | $10 million guarded launch | Ethereum L2 plans |
WBTC: Wrapped Bitcoin — tokenized bitcoin on Ethereum.
cbBTC: Coinbase Wrapped Bitcoin — a WBTC variant issued by Coinbase.
tBTC: Threshold Bitcoin — a decentralized tokenized bitcoin backed by collateral.
A Yield Revolution for Bitcoin Without IL Risk
Problem: impermanent loss (IL) erodes LP returns. When prices move sharply, a pool’s auto‑rebalancing worsens the provider’s position and can lead to losses even with high fees.
Solution: Yield Basis eliminates this risk and enables earnings on
Unlike classic AMMs (e.g., Uniswap), where BTC‑pair yields rarely topped
- ~20 % APR on average in 2019–2024.
- up to 60 % APR at the peak of the 2021 bull market.
Main point: you retain upside—your deposit stays pegged to BTC while earning yield. In other words, bitcoin stops being a passive asset.
IL (impermanent loss): the “invisible” loss versus simple holding when prices in a pool diverge strongly due to automatic rebalancing.
AMM: automated market maker — a swap pool where price and execution are defined by a formula, and users (LPs) supply the liquidity.
Project History and Team
- Late 2024
The Yield Basis concept takes shape and a pilot is prepared. - January 2025
A closed round of $5 million at a $50 million fully diluted valuation; 10% of future YB issuance sold.
The round took ~2 weeks; oversubscribed ×15 (applications for over $75 million). - September 2025
At least six audits of the smart contracts completed (a seventh was underway at launch) — strong focus on security. - Fall 2025
Full release: Yield Basis becomes the first project on the joint Kraken × Legion launchpad. - October 1–2, 2025
Public token sale: IEO on Kraken Launchpad alongside an IDO on Legion; debut price $0.20 (valuation ~ $200 million), followed by a Kraken listing.
Launch strategy: after release the team deliberately limited scaling (guarded launch), focusing on gradually ramping liquidity and operational stability. Egorov notes an “astonishingly fast cycle” — roughly two months from idea to release.
Protocol Architecture: How Yield Basis Works
Yield Basis is deployed on
2× Leverage Without IL
When you supply, say,
Concentrated Liquidity
Liquidity is focused around the current price, boosting capital efficiency: annual turnover to TVL can reach
Subsidization via crvUSD
Leverage introduces borrowing costs. Part of the interest flows back into the protocol through the crvUSD mechanism, offsetting rebalancing expenses. Fee parameters (γ) are tuned so costs are covered and the strategy remains net‑profitable.
Yield formula: APR = 2 × rpool – (rborrow + rIL)
rpool — fee income; rborrow — borrowing cost; rIL — hypothetical loss from price divergence.
Guarded launch: the fall‑2025 start came with TVL and pool limits.
- Launch of three pools:
WBTC ,cbBTC ,tBTC vs crvUSD. - Aggregate TVL cap — $10 million (a crvUSD credit line approved by Curve DAO).
- Phased expansion: raising limits, adding ETH and other assets.
- Further deployments to L2 and compatible networks.
Yields & Strategies: How Much Can You Earn
Yield Basis monetizes trading fees while removing the typical AMM drag. A user deposits, for example,
Historical results:
- Average APR in 2019–2024 — ~20.5%.
- Quiet years — around ~9%.
- At the 2021 bull‑market peak — up to 50–60% APR.
- For comparison: classic BTC AMMs delivered only 1–2% per year.
Past performance isn’t indicative of future results, but the design aims to monetize volatility rather than suffer from it.
Returns are variable and track market activity: higher volatility and volumes mean higher fees and LP profit; calm regimes earn less.
Metrics in Recent Years
For 2023 – mid‑2025, fundamental APR was estimated at about 15%, with annual liquidity turnover reaching 23–24× TVL.
Additional incentives (YB distributions) tend to keep yields from falling below ~10% even in “flat” phases, while during expansions LP profit can materially outpace simple BTC holding.
For users: Yield Basis can feel like a “black box.” You deposit 1 BTC and receive back 1 BTC + X% per year, with the base asset unchanged. That simplicity is a major advantage, but the underlying tech remains complex, which leaves some residual risk.
YB Tokenomics: Issuance, Governance, and Token Value
Yield Basis (YB) is the protocol’s utility and governance token. Total supply is capped at 1 billion YB. At launch, circulating supply was about 9% (2.5% sold in the public sale), with the remainder in treasuries and vesting schedules. Governance follows a veToken model: holders lock YB to receive
| 📊 Category | 🔢 Share | 📌 Comment |
|---|---|---|
| LP Rewards | 30% | Liquidity Incentives |
| Team | 25% | Long‑term vesting |
| Ecosystem Fund | 12.5% | Development support |
| Early Investors | 12.1% | $5m round; 6‑month lockup + 2 years |
| Development Fund | 7.5% | R&D reserve |
| Curve DAO License | 7.4% | Reward for codebase |
| Liquidity Reserve | 3% | For voting |
| Public Sale | 2.5% | Kraken/Legion Launchpad ($0.20 per YB) |
Use Cases: Who It’s For and When to Use It
BTC Holders
For investors holding significant amounts of
- You can deposit part of your coins and earn double‑digit APR.
- When the price rises, your assets appreciate just like in cold storage.
- When it falls, the drawdown is comparable to holding, partially offset by fees.
Main point: BTC stops being a “dead” asset — you can hold it and earn at the same time.
Institutional Investors
For funds and companies with large BTC reserves that need robust, scalable products.
- Traditional solutions yield under 1% per year and don’t beat inflation.
- DeFi used to offer more, but IL risk and shallow liquidity were deterrents.
- Yield Basis eliminates IL, opening the way to deep BTC liquidity.
- Launched with Kraken (Launchpad), MiCA alignment in Europe.
Main point: the protocol is tailored to institutional requirements and can expand to ETH, tokenized commodities, and equities.
Competitors & Risks: Where Yield Basis Has an Edge
Competitors and Alternatives
Yield Basis has few direct analogues. It’s the first practical implementation of IL‑free liquidity pools.
- Uniswap, Balancer, SushiSwap suffer from impermanent loss; returns on volatile pairs are low or negative.
- Bancor attempted to “insure” IL via subsidies, but failed under stress—subsidies proved unsustainable.
- Compared with peers, Yield Basis is more resilient: it relies on correct mathematics, not artificial compensation.
- Other tools: lending (0.5–1% per year), ETH staking (~4–5%), Lightning and mining pools offer minimal returns.
Key Risks
Despite the model’s innovation, DeFi risk cannot be eliminated entirely.
- Smart‑contract complexity: borrowing, a stablecoin, and automated trading increase technical risk even with audits.
- Model novelty: limited operating history; behavior under extreme volatility and higher TVL is unproven.
- External dependencies: the robustness of
crvUSD and the Curve DAO ecosystem. - Regulatory constraints: not available to users from the U.S.
Main point: the model’s math, Curve’s experience, and cautious scaling give
Yield Basis
Idea: use bitcoin’s volatility as an income source while keeping full exposure to BTC.
- For BTC holders who don’t want to sell coins but want yield.
- For institutions and funds — higher capital efficiency without extra directional risk.
- For experienced DeFi users as a new diversifying strategy.
✅ Pros
- No impermanent loss: your deposit remains in bitcoin.
- High yields: on average ~20% versus 1–2% in classic AMMs.
- Simplicity: single‑asset deposit/withdrawal without active management.
- Curve synergy: veToken model, crvUSD, seasoned engineering team.
- Reliability: series of audits, emergency mechanisms, support from major exchanges.
❌ Cons
- New model: limited operating history so far.
- Dependence on crvUSD and the Curve DAO ecosystem.
- Limited access: TVL caps and geographic restrictions at launch.
- Complexity: requires trust in code and audits.
- DeFi risks: bugs or exploits can’t be fully ruled out.
Main point:
🧾 Summary of the Yield Basis Review
Short and to the point: where the protocol excels, where the bottlenecks are, and the overall takeaway.
Yield Basis is one of the standout DeFi startups of
- Key strengths: double‑digit APR, 100% BTC exposure, careful rollout, and tight integration with Curve’s ecosystem.
- Practical effect: BTC stops being “passive”—you can hold it and monetize market activity at the same time.
- Risks: model novelty (limited long‑term data), technical complexity (leverage, stablecoin, auto‑trading), reliance on crvUSD/Curve DAO, regulatory limits.
Main point: instead of paying an “IL tax,” an investor systematically monetizes volatility. With full
❓ Questions & Answers (FAQ)
What is Yield Basis and what problem does it solve?
How exactly does Yield Basis eliminate impermanent loss?
What returns can I expect and what do they depend on?
- ~20% on average for 2019–2024,
- 50–60% APR in active market phases,
- ~9% in quiet years.
Can I lose money in Yield Basis? What are the risks?
- Technical: potential bugs or a smart‑contract exploit.
- Novelty: limited operating history and untested behavior under heavy load.
- External dependencies: robustness of crvUSD and Curve DAO.
- Regulatory: access restrictions in certain jurisdictions (e.g., the U.S.).
Which blockchains and tokens does Yield Basis support?
WBTC: Wrapped Bitcoin — BTC on Ethereum.
cbBTC: Coinbase Wrapped Bitcoin — Coinbase’s WBTC variant.
tBTC: Threshold Bitcoin — a decentralized BTC token backed by collateral.
What is the YB token used for and what gives it value?
How do I become a liquidity provider in Yield Basis?
What happens when I withdraw?
“The key is to keep
— Mikhail Egorov, founder of Curve and Yield Basis2× leverage as precisely as possible. That’s what sets Yield Basis apart from competitors that require manual rebalancing. The idea is simple: if the math works, LPs will trackBitcoin one‑for‑one and avoid the hidden ‘tax’ of impermanent loss.”