Michael Egorov, the founder of Curve Finance, has introduced an innovative proposal on the Curve DAO governance forum aimed at providing a more direct income stream for the decentralized exchange’s token holders. Dubbed “Yield Basis,” this new protocol seeks to offer sustainable returns to CRV holders who stake their tokens in governance votes, receiving veCRV tokens in exchange.
This plan signifies a shift from the traditional model of occasional airdrops, which have characterized Curve’s token economy. The proposal outlines the minting of $60 million in Curve’s crvUSD stablecoin before Yield Basis is activated. The funds generated from the sale of these tokens will be allocated to three bitcoin-focused liquidity pools: WBTC, cbBTC, and tBTC, each with a cap of $10 million.
Yield Basis is designed to return between 35% and 65% of its value back to veCRV holders, with an additional 25% of the Yield Basis tokens reserved for the broader Curve ecosystem. The voting period for this proposal is set to take place from September 17 to September 24.
The intention behind Yield Basis is to attract institutional and professional traders by offering a transparent, sustainable yield on bitcoin, while simultaneously mitigating the risks associated with impermanent loss—a common issue faced by liquidity providers in automated market makers. Impermanent loss arises when the value of assets in a liquidity pool shifts compared to holding the assets directly, leading to reduced profits or increased losses upon withdrawal.
Egorov’s proposal arrives at a challenging time for him personally, as he has faced significant financial setbacks this year. Notably, in June, over $140 million in CRV positions were liquidated after he heavily borrowed against the token to stabilize its price, resulting in $10 million of bad debt for Curve. His most recent liquidation incident occurred in December when he lost 918,830 CRV, valued at approximately $882,000, following a drastic 12% drop in price within a day. He later clarified that this position was related to funds from the uWu hack, which he claimed involved the repayment of a commitment made by the hack’s founder.
In light of these developments, CRV has seen an uptick, rising around 1% in the past 24 hours. As the voting period for the Yield Basis proposal approaches, the outcome could significantly shape the future of Curve Finance and its ecosystem.
