Yield Basis: Disrupting Defi & Bitcoin Yield

**Brian Fabian Crain** (0:00)
Welcome to Epicenter, the show which talks about technologies, projects and people driving decentralization and blockchain revolution. I'm Brian Crain, and today I'm speaking with Michael Egorov.

**Michael Egorov** (0:10)
I thought, what if we have voting power not equal to number of tokens? But what if we lock the tokens, and the voting power will be proportional to number of tokens, and time left before unlock? So if you lock tokens for the maximum of 4 years, you have maximum voting power. But if you lock tokens for 1 year, your voting power is 4 times less.

**Brian Fabian Crain** (0:35)
What do you think would be the kind of yield that people would be able to earn?

**Michael Egorov** (0:40)
Like 20%. It can go down if liquidity in yield basis starts suppressing Bitcoin volatility globally.
And the question is, where is this limit? Something around 50 billion TVL, I guess. Right, so.

**Brian Fabian Crain** (1:00)
Welcome to Epicenter, the show which talks about technologies, projects and people driving decentralization and the blockchain revolution. I'm Brian Crain and today I'm speaking with Michael Egorov, who is the co-founder and CEO of Curve Finance, which was one of the most influential, original and most successful DeFi protocols. And more recently, actually very, very recently, just a few weeks ago, has launched a new protocol called YieldBases, which is also very interesting and is tackling one of the most tricky problems around AMMs, or Automated Market Maker, impermanent loss. So I'm really excited to talk with Michael about this today. So just before we get into that, I would like to share a few words from our sponsors this week.

**SPEAKER_3** (1:50)
This episode is brought to you by Gnosis, building the open internet one block at a time. Gnosis was founded in 2015, and it's grown from one of Ethereum's earliest projects into a powerful ecosystem for open user-owned finance. Gnosis is also the team behind products that had become core to my business and that of so many others, like Safe and Cowswap. At the center is Gnosis Chain. It's a low fee layer one with zero downtime in seven years and is secured by over 300,000 validators. It's the foundation for real-world financial applications like Gnosis Pay and Circles. All of this is governed by Gnosis DAO, a community-run organization where anyone with a GNO token can vote on updates, fund new projects and even run a validator from home. So if you're building a Web3 or you're just curious about what financial freedom can look like, start exploring gnosis.io.

**Brian Fabian Crain** (2:42)
Thanks so much for coming on today, Michael. It's really great to have you back on. I saw we had you on, I think, four years ago, over four and a half years ago already to talk about Curve. So it's been quite a while.

**Michael Egorov** (2:55)
Yeah, I guess the time flies. So you said I'm a co-founder of Curve, but there is no other founder.

**Brian Fabian Crain** (3:04)
That's right. Yeah, the only founder.

**Michael Egorov** (3:07)
So I guess co-founded with my laptop.

**Brian Fabian Crain** (3:15)
Yeah, with your laptop. I should also mention a disclaimer that through my company CoorsOne, we are an investor in YieldBases as well.

**Michael Egorov** (3:27)
Right.

**Brian Fabian Crain** (3:29)
So maybe we can, I mean, I think mainly we want to speak about YieldBases, but for those who are not familiar with Curve, maybe just a few, can you give like a very quick background on what Curve is and what are your biggest learnings from Curve?

**Michael Egorov** (3:51)
Oh, absolutely. So Curve is, I would say, probably best known as the venue for exchanging and providing stablecoin liquidity to swap between stablecoins and between, I would say, between LSTs as well. I started it back in 2020 because, well, with one of the reasons being because I was a big user of MakerDAO, borrowing DAI against ETH because I didn't want to sell pressures, ethers, but I needed some funds, so I borrowed against ETH.
And, you know, you could borrow, sell DAI on, I don't know, somewhere, and withdraw USDC as USD in Coinbase or something. But I found that actually exchange between stablecoins was very, very suboptimal everywhere. On centralized exchanges, on DEXs, like, yeah. And at the same time, I was thinking about making liquidity for what we now call LSTs, Liquid Staking Derivatives. And I thought about actually the same algorithm is applicable to Stablecoins. So I launched Curve with the ability to make Stablecoin liquidity, and already at 1 million TVL, it outperformed everything in existence in this area. And yeah, it just grew since then. And of course, it since then expanded to, well, Bitcoin wrappers, staked ethers, even volatile pairs, and actually what powers YieldBasis is some modifications of Crypto pools for making liquidity between the volatile pairs. So and after that, Curve actually created its own Stablecoin, CurveUSD as well as Lending Protocol with some very interesting mechanisms, like unliquidations and also of course Curve is governed by CurveDAO, for which I invented VE Tokenomics and I iterated further on that in YieldBasis because I think it was nice to somewhat update what token economic designs do.