YieldBasis (YB) is a decentralized finance (DeFi) protocol designed to eliminate impermanent loss for liquidity providers in automated market maker (AMM) pools. By introducing a unique 2× compounding leverage mechanism built on Curve Finance’s infrastructure, YieldBasis enables users to earn stable returns while maintaining exposure to the underlying crypto asset.
Core Mechanism: Compounded Leverage on Curve
At the heart of YieldBasis is a system that maintains a constant 2× leverage ratio. Users deposit crypto assets into the protocol and receive YieldBasis LP tokens, representing their share in the liquidity pool. The protocol then borrows crvUSD against these LP positions through a collateralized debt position (CDP), allowing it to compound returns while mitigating exposure risk.
When market prices shift, a specialized Rebalancing-AMM and VirtualPool architecture comes into play. These components allow arbitrageurs to automatically restore the target leverage ratio, ensuring that YieldBasis LP tokens track the underlying asset’s price movements on a 1:1 basis while generating trading fees from Curve’s liquidity pools.
Dual Earning Strategies
YieldBasis offers two earning options for liquidity providers:
- Unstaked LPs: Earn trading fees directly from Curve pool activity.
- Staked LPs: Receive YB token emissions in addition to trading fees.
A dynamic admin fee formula automatically adjusts based on the proportion of LP tokens staked, splitting revenue between unstaked LP providers and veYB governance participants. As staking participation grows, the admin fee increases non-linearly, boosting the share of trading fees distributed to governance holders.
Tokenomics and Utility
The YB token powers the YieldBasis ecosystem, serving as the foundation for governance, revenue sharing, and incentive alignment. With a capped total supply of 1 billion YB tokens, the token plays multiple roles in the protocol’s structure:
- Governance and Voting Rights: YB can be locked for up to four years to mint veYB (vote-escrowed YB), granting governance power over protocol upgrades, parameter adjustments, and ecosystem proposals. Voting power is time-weighted and decays linearly unless max-locked for the full duration.
- Gauge Voting for Emissions: veYB holders influence YB token emission distribution by voting on gauge weights that determine how incentives are allocated across liquidity pools. Votes can be adjusted after a 10-day cooldown period, allowing communities to direct rewards strategically.
- Protocol Revenue Sharing: veYB holders receive a share of protocol fees, distributed through the dynamic admin fee mechanism. As the proportion of staked LP tokens rises, more trading fees flow to long-term governance participants.
- Liquidity Mining Incentives: Stakers of YieldBasis LP tokens earn YB emissions according to an exponential decay schedule, with emission rates controlled by the GaugeController contract.
Architecture and Integration
Built atop Curve Finance, YieldBasis leverages its AMM infrastructure for deep liquidity and reliable pricing. The protocol’s integration with crvUSD enables leveraged exposure and compounding yield without introducing systemic volatility risks. Through its Rebalancing-AMM, arbitrage markets naturally maintain equilibrium and minimize slippage for liquidity providers.
Governance Through veYB
The veYB governance model aligns long-term stakeholders with the protocol’s economic success. By locking YB tokens, holders not only gain voting influence but also share in protocol-generated revenue. This design mirrors the governance mechanics seen in protocols such as Curve DAO, reinforcing sustainable participation and decentralized decision-making.
“YieldBasis redefines DeFi liquidity provision by removing impermanent loss, integrating automated leverage management, and rewarding long-term governance — creating a new benchmark for capital efficiency in decentralized markets.”
Conclusion
YieldBasis (YB) represents a major evolution in DeFi yield strategies, offering a transparent and efficient system for leveraged liquidity provision without impermanent loss. By combining Curve Finance’s deep liquidity pools with automated leverage balancing and ve-token governance, YieldBasis bridges yield generation with sustainable community control
