TL;DR
- Credit Line: Curve DAO approved a $60M crvUSD credit for Yield Basis to launch Bitcoin pools capped at $10M each.
- Community Pushback: Critics warned of risks, incomplete tokenomics, and potential liability for the protocol in case of exploits.
- Founder’s Response: Egorov defended safeguards, citing multiple audits, an emergency stop mechanism, and investor transparency.
Curve DAO has approved a proposal to extend a $60 million credit line in crvUSD stablecoin to Yield Basis, a new protocol developed by Curve founder Michael Egorov. The decision clears the path for Yield Basis to launch Bitcoin-focused liquidity pools on Ethereum, aiming to address impermanent loss and expand the protocol’s ecosystem. While the move promises new yield opportunities, it has also sparked debate within the community over risk management and transparency.
Yield Basis and Bitcoin Pools
Yield Basis is designed to introduce automated market maker pools centered on Bitcoin assets, including WBTC, cbBTC, and tBTC. These pools will initially be capped at $10 million each, with the broader goal of embedding crvUSD deeper into DeFi infrastructure. By targeting impermanent loss, the protocol seeks to make liquidity provision more attractive while generating potential fee flows for veCRV token holders. The initiative reflects Curve’s strategy to strengthen its stablecoin’s role within DeFi.
Community Concerns on Risk
Not all DAO members supported the proposal. On Sept. 18, pseudonymous community member Small Cap Scientist criticized the plan as “extremely extractive” for Curve. He argued that no independent party had evaluated the economic risks of Yield Basis and warned that the $60 million line lacked caps tied to crvUSD’s total value locked. He also raised the possibility that a hack could leave Curve liable for drained funds, while pointing to incomplete tokenomics and limited transparency around seed investors.
Egorov’s Defense of Safeguards
Egorov responded directly to the criticism, emphasizing that Yield Basis had undergone six audits, with a seventh in progress. He highlighted the presence of an emergency stop mechanism managed by Curve’s Emergency DAO multisig as a key safeguard. Egorov also assured members that Yield Basis would bear responsibility for any exploits.
To address transparency concerns, he noted that investor allocation details had been added to the governance proposal and defended the inclusion of prominent ecosystem figures as natural partners.
Expanding Curve’s Ecosystem
The approval signals Curve’s intent to expand beyond its established role in stablecoin liquidity. By supporting Yield Basis, the DAO aims to integrate Bitcoin more deeply into DeFi while reinforcing crvUSD’s position. If successful, the pools could generate new revenue streams for veCRV holders and strengthen Curve’s competitive edge. However, the debate underscores the tension between innovation and risk, a recurring theme in decentralized governance.
