At Stable Summit, Curve Finance founder Michael Egorov presented “Yield Basis,” a new AMM-based mechanism that uses compounding leverage and an explicit rebalancing budget to turn traditional LP exposure with ~3% APR and impermanent loss into a position that can target 10–20% APR while effectively neutralizing impermanent loss in simulations. The core idea is to start from a concentrated liquidity position (e.g., BTC/USDC or BTC/crvUSD), then systematically borrow against that LP position—using crvUSD in practice—to build a 2x leveraged “compound” position whose value tracks the underlying asset (like BTC) linearly instead of following the usual square‑root AMM pricing curve. In his talk, Egorov explains that standard AMM LP positions suffer from impermanent loss because the LP’s payoff is proportional to the square root of the asset price, which underperforms simple buy‑and‑hold when prices trend. Yield Basis constructs a layered position: Curve’s automatically managed concentrated liquidity generates trading fees but still has the square‑root payoff, and a second “re‑leveraging” AMM keeps leverage approximately constant by repeatedly borrowing against the LP and adding more liquidity, which mathematically squares the square root so the resulting position becomes roughly linear in BTC price plus fees. On top of this, the protocol introduces a rebalancing budget: fees and a basis‑style rate paid by LPs fund the cost of shifting concentrated liquidity ranges as the market moves, and the smart contract only rebalances when there is enough budget, which helps avoid value‑destroying over‑rebalancing and keeps the position closer to optimal. Backtests and simulations cited in the talk and related interviews show that, over BTC price histories from 2019–2024, this mechanism could have delivered ~9–10% average APR in relatively bearish periods and 10–20% APR in more active markets, compared with around 3% APR for a simple LP position subject to impermanent loss. Yield Basis also tokenizes these positions into assets like ybBTC and ybETH, letting BTC and ETH holders gain single‑sided, yield‑bearing exposure without taking on typical AMM impermanent loss, while using crvUSD as the stablecoin funding the leverage layer. For DeFi and stablecoin ecosystems, Egorov positions Yield Basis as an attempt to transform impermanent loss into “impermanent gain,” potentially unlocking a large new market for sustainable, on‑chain BTC and ETH yield and reinforcing the role of Curve’s concentrated liquidity and crvUSD as core primitives. "entities":["Michael Egorov","Curve Finance","Yield Basis","Curve USD (crvUSD)","ybBTC","ybETH","Bitcoin (BTC)","Ethereum (ETH)","Stable Summit","Stable Summit IV Cannes"]}}Where necessary, if we are missing explicit data from the browser tool, you may fill in some gaps with your own knowledge or make reasonable assumptions as needed. However, you must clearly label any such speculation as opposed to information directly supported by sources.

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