How @yieldbasis eliminates impermanent loss(please note it is not due to incentives but due to the design) Lets say, we deposit in an AMM and start with 1 BTC and $100,000 in stablecoins, and if the BTC's price doubles to $200,000, our AMM position might end up with approximately 0.707 BTC and $141,000 in stablecoins, totaling around $283,885. In contrast, simply holding would have given us $300,000, resulting in about a 5.7% IL. How does it work in @yieldbasis and how does it eliminate this loss? 1. We deposit BTC worth $100,000 at current price(assume) 2. The protocol borrows an equal value of $crvUSD ($100,000) using our $BTC as collateral. 3. Our 1 BTC and the borrowed $100,000 crvUSD are paired and supplied into the Curve BTC/crvUSD liquidity pool. 4. The resulting Curve LP tokens are then used as collateral for the $crvUSD debt. 5. The system maintains a 2× leverage ratio, meaning the debt is always 50% of the total LP value. This is achieved through automated rebalancing mechanisms involving arbitrageurs and virtual pools. By maintaining this constant leverage and ensuring the position tracks BTC price 1:1, YieldBasis effectively eliminates impermanent loss. Rebalancing: When BTC's price changes: ->If BTC price rises, the LP's value increases, but the debt remains fixed. To restore the 50% debt ratio, arbitrageurs can bring in additional crvUSD, mint more LP tokens, and adjust the debt accordingly. ->If BTC price falls, the LP's value decreases, but the debt remains fixed. To restore the 50% debt ratio, arbitrageurs can remove some LP tokens, withdraw crvUSD, and reduce the debt accordingly. This dynamic rebalancing ensures that our position always tracks BTC price movements, maintaining the 1:1 correlation and eliminating impermanent loss. Earning with YieldBasis: 1. We earn trading fees from the underlying Curve pool directly in BTC. 2. We can stake your ybBTC to earn YB token emissions instead of trading fees. Additionally, vote-locking YB tokens grants voting power and a share of BTC fees.(Similar to the $CRV token holders getting bribes) Important things to note: 1. The debt ratio is also balanced to 50% 2. CRVUSD is initially borrowed with BTC as collateral and 3. LP position after depositing in AMM is again used as collateral for the CRVUSD that was borrowed 4. As price changes, arbitragers can balance the pool to earn additional rewards 5. Additional incentives in $YB for depositing 6. Pool will later add other assets and will have higher demand for crvUSD.

The current @yieldbasis proposal is very dangerous for @CurveFinance, I'll be voting "No". This vote is extremely extractive from CurveDAO and the implications of this vote concern me for the future of the protocol. My Concerns: 1. Economic Risk - No third parties evaluated the economic risks of the protocol, only the Yield Basis team. This credit line should be capped on a percentage basis of $crvUSD TVL. Individual wrapped assets ($wBTC, $cbBTC, $tBTC) and their pools also need caps to prevent systematic risk to $crvUSD. There are no guardrails at all currently as the proposal was written by Yield Basis. 2. Hack Recovery Plan - The way this is structured, a Yield Basis Hack is the responsibility of @CurveFinance. $crvUSD TVL is $250M. If any $crvUSD in the LPs are drained, the balance sheet hole will be too large to fill. The whole $CRV ecosystem would likely go to zero while Yield Basis takes on no liability. $YB would be free to launch on top of another stablecoin ecosystem the next day leaving CurveDAO with all the $crvUSD debt. 3. Transparency - The Yield Basis seed round participants and their allocations have not been disclosed to CurveDAO. Devs/Founders from within the ecosystem did not disclose their seed stake in $YB and will be voting with delegated votes. 4. Clear Incentives and Compensation - $YB hasn't released full details of their tokenomics or incentive systems. Yield Basis also plans to pay for Curve licensing through bribes. This is a cost to CurveDAO as emissions are paid. They shouldn't be paying emissions on another protocol using their technology. Conclusion - This proposal at scale gives $crvUSD a single point of failure that is entirely controlled by a third party protocol (YB). There are massive conflicts of interest all over this that need addressed. There is also absolutely no excuse for the lack of transparency when requesting a $60M credit line. CurveDAO needs to protect themselves here first, and Yield Basis should come second. These requests aren't extremely time consuming and should benefit both parties to discuss. My concerns were posted 10 days ago to the discussion page, I haven't received any response. It's worth noting, I will gladly vote in favor of a @yieldbasis credit line if the glaring risks and transparency issues are addressed. (Discussion Page - gov.curve.finance/t/create-a… )