Yield Basis
Yield Basis borrows crvUSD from crvUSD minting mechanism. It is required for operation of Yield Basis pools.
Particularly, it results in borrowing liquidity brought by LP to Yield Basis pool.
If Yield Basis attracted 10m crvusd to be able to operate without Impermanent Loss
How it affects Curve? and veCRV?
- Interest rate, paid for borrowing crvUSD is NOT paid to Curve. It is used for Yield Basis positions re-leverage, it is NOT benefiting veCRV
- What benefits veCRV -> indirectly -> if someone sells BTC in Yield Basis pool, he receives crvUSD that needs to be changed to USDT(or USDC..) to be able to used in general finance applications. So, it drives trading fees derived from newly minted crvUSD supply that is used for Yield Basis pools. Indirectly.
- There is a YB - crvUSD pool launched in Curve, and it will be the only liquidity spot for YB at the beguinning, so all trading volumes will also benefit Curve -> veCurve by means of fees
Mechanism map
- Vote-escrowed Governance
- Yield-Bearing Staking
Token functions
Vote-escrowed Governance
This sub-mechanism represents tangible and intangible value derived from controlling the decision-making regarding rewards allocation, protocol parameters, and other decisions related to the Yield Basis DAO.
One of the core governance decisions that veYB holders make is allocating YB rewards to various Yield Basis LP tokens. These YB Rewards are allocated in exchange for LP-related Yield, which is transferred to veYB holders (see detailed explanation below).
The requirement for obtaining governance power is locking the YB token in the vote-escrow contract.
Value drivers
Transferability Restriction
represents the transformation of YB into veYB by locking in vote-escrow contract
Represents the requirement to lock YB in the vote-escrow contract (apply Transferability Restriction) to activate its utility. During the lock-up period, the transferability of the token is temporarily disabled in exchange for governance power and protocol fees.
[7] = ƒ(lock_time, YB_number, value_at_lock)
lock_time— is the length of the lock-up period set up by the userYB_number— is the number of tokens locked up by the uservalue_at_lock— is the market value of the locked token position at lock time
Conditional Action
represents the user governance participation action (act of voting)
The Conditional Action represents the necessity to vote to receive the Governance value.
[8] = binary
Value capture investment profile
Implementation
Yield Basis follows a classical veToken model pioneered by Curve. The process whereby the user receives YB via the liquidity mining is mostly described in the token page of ybBTC, but here we must provide a further crucial detail.
As there can be multiple gauges that receive YB allocations from the same general source, the allocation must be split somehow. It is done via gauge voting, as in Curve.
Any user can invoke create_lock() to lock his YB tokens in the Voting Escrow crontract, whereupon he becomes able to manage his lock (increase time & amount and withdraw() upon the lock expiry). He can then place votes on the gauges for the purposes of YB distribution by invoking the vote_for_gauge_weights() function of the Gauge Controller contract (see the scheme above).