Yield Basis: Disrupting Defi & Bitcoin Yield

Brian Fabian Crain and Michael Egorov, Curve Finance founder, discuss Curve's origins: solving inefficient DAI/USDC swaps after MakerDAO borrows by creating a DeFi AMM for stablecoins and LSTs.

It hit 1M TVL with a bonding curve concentrating liquidity at 1:1, more effective for pegged assets than Uniswap. Features grew to include BTC wrappers, stETH pairs, and crvUSD (a CDP stablecoin with reversible liquidations & a peg-keeper).

Governance uses veCRV: Locking CRV grants voting power proportional to lock duration, a mechanism now refined in Yield Basis.

Yield Basis solves impermanent loss in volatile pools (e.g., BTC/crvUSD). Users deposit BTC; the protocol borrows crvUSD, pairs it at 2x leverage (50% debt/equity), and uses LP tokens as collateral. This gives 1:1 asset tracking, while fees accrue from auto-rebalancing arbitrage.

Simulations show 20%+ APY (may decline as BTC volatility drops) under a $50B TVL cap. It complements Curve by directing veCRV incentives to crvUSD pools, enhancing liquidity, fees, and DAO revenues. Key considerations: manual migrations, deterring forks, and dev support to scale.

Topics Discussed

• 00:00 Introduction to Curve Finance and YieldBases
• 02:24 Understanding Curve's Unique Mechanisms
• 07:58 The Concept of veTokenomics
• 15:27 Lessons Learned from Building Curve
• 22:20 Exploring YieldBasis and Its Innovations
• 29:47 Understanding Yield Basis and Collateralization
• 32:25 Navigating Market Volatility and Liquidation Events
• 35:32 Metrics and Performance Insights of Yield Basis
• 38:35 Scaling Yield Basis: Future Directions
• 40:33 Yield Expectations and Market Dynamics
• 43:12 Potential Growth and Liquidity Challenges
• 46:18 Expanding to Other Chains and Governance Tokens
• 49:35 The Symbiotic Relationship with Curve
• 54:31 Upcoming Milestones and Future Developments

Links Mentioned

• Michael Egorov on X
• Curve Finance
• Yield Basis
• Gnosis
• Epicenter - All Episodes

Sponsors

Gnosis: Building decentralized infrastructure since 2015. With Gnosis Pay, the first Decentralized Payment Network. Start leveraging its power at gnosis.io

This episode is hosted by Brian Fabian Crain.