KEY TAKEAWAYS
- YieldBasis launches on Aragon OSx, addressing DeFi’s impermanent loss challenge with a governance system that rewards long-term commitment.
- The protocol uses veYB veNFTs for governance, allowing token holders to direct emissions and shape growth.
- Innovative governance features include declining voting power for late voters and proposal cooldowns to prevent spam.
- YieldBasis initially focuses on BTC pools, aiming to extend its framework to other assets over time.
YieldBasis, a new protocol developed by the team behind Curve, has launched on Aragon OSx, aiming to address one of decentralized finance’s (DeFi) persistent challenges: impermanent loss. This initiative builds upon the ve-lockers and gauges model pioneered by Curve, which has become a cornerstone in DeFi for rewarding long-term commitment and directing incentives.
The YieldBasis protocol introduces a governance system that aligns long-term commitment with incentive allocation, leveraging Aragon’s modular stack. This system allows YieldBasis tokens to be locked as veYB veNFTs, granting holders governance rights. The voting power of these tokens decays over time, ensuring that long-term commitment is prioritized. veYB holders can direct emissions, shaping the protocol’s growth through the established ve and gauge model.
Innovative Governance Features
To support the launch, Aragon has designed a modified Token Voting plugin for OSx, enhancing the governance model with several new mechanisms. These include declining voting power for late voters, which discourages last-minute voting swings and rewards early participation. Additionally, proposal cooldowns are implemented to protect against spam by enforcing a minimum wait between new proposals from the same creator. The split voting feature allows liquid lockers and autovoters to divide their voting power across yes, no, or abstain options, enabling more precise representation.
This combination of Curve-style tokenomics and governance refinements positions YieldBasis as one of the most advanced implementations of the ve and gauge model to date. While Curve’s model effectively solved incentive alignment, it did not address impermanent loss. YieldBasis tackles this issue by building directly on top of Curve pools, offsetting impermanent loss with crvUSD while using ve-style governance to allocate incentives.
Focus on BTC Pools
At launch, YieldBasis focuses on BTC pools, providing Bitcoin holders with a way to participate in liquidity pools without the drawback of impermanent loss, while still earning protocol rewards and participating in governance through veYB locks. Over time, the framework is expected to extend beyond BTC, applying the same design to other assets and pools.
This launch highlights how Aragon’s modular stack can host proven tokenomics frameworks that evolve into customizable designs, allowing protocols to adapt to their specific needs rather than relying on one-size-fits-all solutions. YieldBasis combines the ve and gauge model with a novel automated market maker (AMM) design to offset impermanent loss, demonstrating how protocols can innovate while building on established frameworks.
For more details, the announcement can be found here.
Why This Matters: Impact, Industry Trends & Expert Insights
YieldBasis has launched on Aragon OSx, utilizing Curve’s ve and gauge models to address impermanent loss and enhance governance in DeFi.
Recent industry reports highlight the maturation and sophistication of DeFi governance models, including the integration of strategic token utility and allocation. This aligns with YieldBasis’s approach of leveraging ve-lockers and gauges for long-term incentive alignment and governance.
Dutch Crypto Talk notes that ve and gauge models significantly impact the DeFi industry by fostering ecosystem growth and liquidity commitment. This supports YieldBasis’s implementation of these models to enhance DeFi tokenomics and governance.
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