Curve DAO Greenlights Yield Basis Protocol for Enhanced Bitcoin Yield Generation on Ethereum

Curve DAO has officially approved the launch of "Yield Basis," a cutting-edge protocol designed by Curve Finance founder Michael Egorov. As reported by Crypto Times, Yield Basis integrates Curve's native stablecoin, crvUSD, as its primary operational asset. The initiative includes a starting credit limit of 60 million crvUSD to support the protocol's rollout, which aims to revolutionize Bitcoin yield generation on Ethereum while addressing a critical pain point in decentralized finance (DeFi): impermanent loss (IL).

Curve’s Vote Signals Strong Community Support

The Curve community's decision to approve Yield Basis reflects widespread support, with a participation rate exceeding 80% in the vote that concluded on September 24. A significant number of votes were cast through Convex Finance, a vested system that allows token holders enhanced governance influence. Notably, while Curve founder Michael Egorov holds more than 3% of the total governance voting power, he confirmed that his votes were cast only after the proposal's outcome was determined.

The approval of Yield Basis represents an important milestone not just for Curve, but also for the larger DeFi ecosystem, as it provides a path to more sustainable Bitcoin yield opportunities on Ethereum.

Yield Basis: A Phased Rollout on Ethereum

Yield Basis will be implemented on the Ethereum network in a phased rollout, following guidelines laid out in Egorov’s initial proposal in August. The credit allocation will focus on three Bitcoin-oriented liquidity pools:

• Wrapped Bitcoin (WBTC)
• Coinbase Wrapped Staked Ethereum (cbBTC)
• tBTC

Each pool will receive an initial credit limit of $10 million, which forms the backbone of leverage-oriented Bitcoin yield strategies. To ensure a measured launch, the first three days will see cap limits set at $1 million per pool. Full credit deployment is scheduled to occur shortly after this controlled initial phase, with liquidity pools expected to become operational within 12 hours of the vote’s announcement on September 24.

Tackling Bitcoin Yield Challenges on Ethereum

For years, Bitcoin has faced steep hurdles when it comes to generating high yields within the DeFi ecosystem. Traditionally, Wrapped Bitcoin (WBTC) holders could deposit liquidity into lending protocols like Aave or automated market makers (AMMs) such as Uniswap. However, these strategies often expose users to impermanent loss, significantly reducing net returns. Historical Bitcoin yield opportunities have typically been limited to modest percentages, rarely exceeding 1%–2% in most cases.

Yield Basis aims to overcome these limitations with an innovative design that minimizes the risks associated with IL. By reducing loss exposure and leveraging trading activity to bolster profitability, the protocol enables single Bitcoin deposits to achieve more meaningful returns.

As a result, Yield Basis positions Curve as a formidable competitor in the Bitcoin yield generation market, directly challenging established players like BadgerDAO and Ethereum-based Bitcoin yield products. Amid these advancements, Bitcoin-native DeFi solutions on layer-2 infrastructures are also emerging as potential rivals.

Broader Implications for Curve DAO

The integration of Yield Basis into the Curve ecosystem represents a pivotal moment for the platform, introducing a diversified revenue stream powered by Bitcoin yield strategies tied to crvUSD. This development has broad strategic implications for Ethereum as it solidifies its standing as a blockchain capable of hosting high-value Bitcoin-related DeFi use cases. By bridging the gap between Ethereum's robust smart contract capabilities and Bitcoin's liquidity, Yield Basis may set a benchmark for other protocols seeking to synergize the two leading ecosystems in crypto.

Nonetheless, Yield Basis’s success will require overcoming competition in the growing Bitcoin yield market, which continues to attract attention from both legacy players and emerging protocols. This makes the phased rollout not just an important technical milestone but also a strategic test of how quickly and effectively Curve can adapt to evolving market demands.

A New Era of Bitcoin Yields on Ethereum

With the activation of Yield Basis, Curve DAO is poised to redefine Bitcoin yield opportunities, all while employing the stability of crvUSD to mitigate impermanent loss. The initiative could significantly shift the competitive landscape in favor of Ethereum-based solutions, pushing Ethereum to the forefront of Bitcoin-focused DeFi innovation.

As Bitcoin yield generation evolves, Curve’s Yield Basis serves as both a direct competitor to existing frameworks and a gateway to building deeper financial integrations between Bitcoin and Ethereum. Whether it succeeds or not will shape the future trajectory of Bitcoin yields in the DeFi space.