Yield Basis Raises $5M to Combat Impermanent Loss in DeFi

The founder of Curve, Michael Egorov, is developing a new project called Yield Basis, which has raised $5 million in funding at a $50 million valuation. The project aims to help users holding tokenized Bitcoin and Ethereum earn yields from providing liquidity by mitigating impermanent loss, a risk in Decentralized Finance (DeFi) where liquidity providers may end up with a lower value of assets compared to holding the assets directly, even after earning trading fees or token rewards.

The funding document, dated January 11, 2025, reveals that the project sold 10% of its "YB" token total supply to investors—1 billion out of 10 billion tokens. Investor vesting plans include a 6-month lock-up period followed by a 2-year linear unlock. 30% of the total supply will be allocated for community incentives through liquidity mining. Other allocations include 25% to the team, 15% for development reserves, 10% for Curve technology licensing, and 10% for partnerships.

Yield Basis is designed to address the issue of impermanent loss, which can deter users from participating in liquidity provision in DeFi platforms. By mitigating this risk, Yield Basis aims to encourage more users to engage in liquidity provision, thereby increasing the overall liquidity and stability of the DeFi ecosystem.

The project's success will depend on its ability to effectively mitigate impermanent loss and attract a significant number of users to its platform. As the DeFi landscape continues to evolve, projects like Yield Basis play a crucial role in addressing the challenges faced by liquidity providers and fostering a more robust and sustainable ecosystem.