Yield Basis launches permissionless propAMM on Curve to improve LP returns.
DeFi & Yields ·
Yield Basis has deployed a permissionless liquidity mechanism on Curve designed to address impermanent loss for LPs providing BTC and ETH liquidity. The protocol pairs user deposits of these assets with borrowed crvUSD and continuously rebalances positions to enable LPs to capture fees on approximately 2× leveraged exposure while maintaining near-linear price exposure to the underlying asset, rather than the typical convex payoff structure of standard automated market makers.
The core challenge Yield Basis targets is a long-standing problem in decentralized finance: passive liquidity providers in constant-product AMMs suffer losses when asset prices move, as the automated rebalancing forces them to accumulate the weaker-performing token. Concentrated liquidity designs like Uniswap v3 offer a partial solution through custom price ranges, but they demand active management—positions that drift outside chosen bands stop earning fees until manually adjusted. Many LPs consequently underperform simple buy-and-hold strategies because they lack the resources or attention to rebalance frequently through volatile market swings.
It remains unclear whether Yield Basis's fixed-leverage model will sustain the fee distributions and capital efficiency it projects in sustained bear or range-bound markets, or how liquidation risk and crvUSD borrowing costs will affect net returns for participating LPs across different market regimes. On-chain performance data over multiple market cycles will be needed to validate whether the protocol's design durably overcomes the operational friction that has historically plagued passive LP strategies.