Curve’s decentralized autonomous organization (DAO) has approved a proposal granting Yield Basis—a new protocol created by Curve founder Michael Egorov—a $60 million credit line in crvUSD stablecoin ahead of its mainnet debut.
This approval paves the way for Yield Basis to launch Bitcoin-focused liquidity pools designed to eliminate impermanent loss, the temporary loss in value that can occur when assets in a liquidity pool fluctuate compared with simply holding them. The protocol also seeks to unlock new yield opportunities for Bitcoin within decentralized finance (DeFi).
The plan calls for three pools—WBTC, cbBTC, and tBTC—on Ethereum, built using Yield Basis’ automated market maker (AMM) architecture, each initially capped at $10 million.
Curve Finance said the initiative will expand its ecosystem, integrating its native stablecoin more deeply into DeFi infrastructure and potentially increasing fee revenue for holders of veCRV, the vote-escrowed form of Curve’s governance token.
Concerns Over Risk, Tokenomics, and Liability
Not all Curve DAO members were on board with the proposal. On September 18, the pseudonymous social media user Small Cap Scientist raised alarms, saying the plan exposed Curve to considerable risk.
In an X post, the user described the proposal as “extremely extractive” for the DAO. They highlighted that no third party had evaluated Yield Basis’ economic risks, and that the $60 million credit line lacked caps tied to crvUSD’s total value locked (TVL). The post also warned that a hack on the new protocol could leave Curve liable for lost funds.
Additional concerns were raised about transparency around Yield Basis’ seed investors and incomplete tokenomics, with the member arguing that the protocol should not have control over crvUSD without stronger safeguards.
Curve Founder Responds
Michael Egorov, Curve’s founder, defended the proposal. Responding on X, he said Yield Basis had undergone six audits, with a seventh in progress, and highlighted an emergency stop mechanism overseen by Curve’s Emergency DAO multisig as a protective measure.
Egorov assured the community that Yield Basis would bear responsibility for any exploits and noted that the investor allocation breakdown had been included in the governance proposal.
“If anything happens, of course, it’d be on Yield Basis to deal with it to the highest degree possible,” he wrote.
He also explained that bringing in notable ecosystem figures as investors is a natural step for a project like Yield Basis, emphasizing that strong partnerships are a key strength of Curve.
