Curve Finance, a prominent player in the decentralized finance (DeFi) landscape, is making waves with its latest proposal, Yield Basis. This initiative, spearheaded by founder Michael Egorov, seeks to transform the Curve DAO’s native token, CRV, into a robust income-generating asset. The proposal, currently under consideration by the Curve DAO governance forum, aims to provide CRV holders with a more direct and sustainable avenue to earn income.
A New Era for CRV Holders
For years, Curve Finance has been synonymous with DeFi innovation, yet its token economy has largely relied on sporadic airdrops to engage its community. Now, with Yield Basis, Curve intends to shift its strategy significantly. Under this proposal, CRV holders who stake their tokens for governance participation will receive veCRV tokens, unlocking a steady stream of income. The long-term goal: distribute sustainable returns to the community and attract a broader range of investors.
The proposal outlines the minting of $60 million in Curve’s crvUSD stablecoin, which will play a critical role in launching Yield Basis. The funds from selling these stablecoins will back three dedicated bitcoin-focused pools: WBTC, cbBTC, and tBTC, each capped at $10 million. This approach aims to deliver transparent and sustainable bitcoin yields, a compelling offer for institutional and professional traders, while sidestepping the impermanent loss issues often associated with automated market makers (AMMs).
Navigating the Challenges of Impermanent Loss
Impermanent loss is a well-known challenge in the realm of AMMs. It occurs when the value of assets locked in a liquidity pool fluctuates, leading to potential losses when compared to holding the assets outright. Yield Basis seeks to mitigate this risk, offering a more stable environment for liquidity providers. By focusing on bitcoin-focused pools, Curve aims to provide a reliable yield without the common pitfalls of value fluctuation.
The proposal’s success hinges on the community’s approval, with voting scheduled from September 17 to September 24. If greenlit, Yield Basis promises to return between 35% and 65% of its value to veCRV holders, while allocating 25% of Yield Basis tokens for the broader Curve ecosystem. This move could redefine how CRV tokens are perceived and utilized within the DeFi space.
Egorov’s Financial Turbulence
The introduction of Yield Basis comes at a tumultuous time for Curve Finance’s founder, Michael Egorov. Over the past year, Egorov has faced a series of high-profile financial setbacks linked to leveraged CRV purchases. In June 2024, more than $140 million worth of CRV positions were liquidated after Egorov borrowed heavily against the token to stabilize its price. This led to a significant dent, leaving Curve with $10 million in bad debt.
Most notably, in December 2024, Egorov faced another liquidation of 918,830 CRV, equivalent to roughly $882,000, following a sharp 12% drop in the token’s value in a single day. Egorov later clarified on social media platform X that this liquidation was tied to funds from the uWu hack and represented a repayment of a promise made by uWu’s founder.
Despite these financial hurdles, CRV has seen a slight uptick, rising around 1% in the past 24 hours. This minor increase signals a cautious optimism among investors as they await the outcome of the Yield Basis proposal.
A Balanced Perspective
The introduction of Yield Basis marks a pivotal moment for Curve Finance and its community. On one hand, the proposal presents an exciting opportunity to elevate CRV’s utility and attract a more diverse investor base. On the other, it arrives amidst Egorov’s personal financial struggles, which could cast a shadow over the initiative’s reception.
Proponents argue that Yield Basis could set a new standard for DeFi projects by providing a more predictable and lucrative income stream for token holders. The focus on mitigating impermanent loss and catering to institutional traders underscores Curve’s commitment to innovation and sustainability.
Critics, however, may point to Egorov’s recent financial woes as a potential risk factor. The founder’s history of leveraged bets and subsequent liquidations might raise concerns about the long-term viability of Yield Basis and its ability to deliver on its promises.
As the Curve community deliberates on the proposal, the future of CRV and its role within the DeFi ecosystem hangs in the balance. Should Yield Basis gain approval, it could pave the way for a new era of income-generating opportunities for CRV holders, while solidifying Curve’s position as a leader in decentralized finance.
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
