The decentralized finance (DeFi) market continues its rapid growth, with projections from The Business Research Company estimating a market size of $178.06 billion by 2029, reflecting an annual growth rate of 43%. Despite these opportunities, liquidity providers face a persistent challenge: impermanent loss (IL)—the reduction in value of assets deposited in liquidity pools compared to simply holding them.
Enter YieldBasis, a protocol developed by Mikhail Egorov, the founder of Curve Finance. YieldBasis aims to eliminate impermanent loss, providing a safer and more predictable experience for DeFi investors, starting with tokenized Bitcoin and expanding to other assets over time.
How YieldBasis Works
YieldBasis leverages Ethereum smart contracts and a leveraged lending mechanism to protect liquidity providers from impermanent loss. Users deposit assets into specialized pools, and the protocol uses collateralized debt positions to stabilize returns.
Investors can choose between two earning modes:
- Keep revenue in Bitcoin: Receive real trading fees generated by the pool.
- Earn YB tokens: Forgo trading fees in exchange for YieldBasis’s native token.
| Feature | Description |
|---|---|
| Protocol | YieldBasis |
| Founder | Mikhail Egorov (Curve Finance) |
| Network | Ethereum |
| Focus | Tokenized Bitcoin pools (initially) |
| Risk Mitigation | Leverage-based impermanent loss protection |
| Earning Modes | Bitcoin revenue or YB token rewards |
Why YieldBasis Matters
Impermanent loss has long been a barrier to DeFi adoption. By offering risk-mitigated liquidity provision, YieldBasis:
- Encourages more users to participate in DeFi pools
- Reduces exposure to market volatility
- Introduces innovative reward structures via YB tokens
According to experts, protocols like YieldBasis represent a key evolution in DeFi infrastructure, making decentralized finance safer and more appealing to both retail and institutional investors.
As the DeFi ecosystem grows, tools that address structural risks such as impermanent loss will be crucial for sustaining long-term growth and adoption. YieldBasis could become a cornerstone for liquidity providers seeking predictable returns in a volatile market.
