Curve DAO supports $60M in crvUSD credit for new protocol

Curve’s decentralized autonomous organization (DAO) approved a proposal to provide Yield Basis, a new protocol developed by Curve founder Michael Egorov, with a $60 million credit line in crvUSD stablecoin ahead of its mainnet launch. 

The vote cleared the way for Yield Basis to introduce Bitcoin-focused liquidity pools designed to eliminate impermanent loss — when assets in a liquidity pool dip in value compared with simply holding them. The protocol also aims to unlock yield opportunities in Bitcoin (BTC) in decentralized finance (DeFi).

Under the plan, three pools, including WBTC, cbBTC and tBTC, will be launched on Ethereum using Yield Basis’ automated market maker (AMM) architecture. Curve Finance said the pools will initially be capped at $10 million. 

The initiative aims to expand Curve’s ecosystem, embedding its native stablecoin deeper into DeFi infrastructure. It also aims to boost potential fee flows to holders of veCRV tokens, the vote-escrowed version of CRV, Curve Finance’s governance token. 

Cointelegraph reached out to Curve for more information but had not received a response by publication. 

Curve proposal to create a crvUSD credit line to Yield Basis. Source: Curve Finance

Concerns on risk controls, tokenomics and liability

Not all Curve DAO members welcomed the proposal. On Sept. 18, the pseudonymous social media figure Small Cap Scientist said the plan exposed Curve to significant risks. 

In an X post, the user said the plan is “extremely extractive” for the DAO. He warned that no third-party had evaluated the economic risks of Yield Basis and that the $60 million lacked caps tied to crvUSD’s total value locked (TVL). He also said that a hack on the new protocol could leave Curve to bear the liability for the drained funds. 

The community member also raised concerns over transparency around Yield Basis seed investors and incomplete tokenomics, saying the protocol should not be granted control over crvUSD without stronger guardrails. 

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Curve founder defends proposal 

Egorov pushed back on the concerns. Responding to the X post, Egorov said Yield Basis went through six audits, with a seventh ongoing. He also pointed to an emergency stop mechanism managed by Curve’s Emergency DAO multisig as a guardrail. 

He assured the community that Yield Basis would be responsible for any exploits and said its investor allocation breakdown was added to the governance proposal.

“If anything happens, of course, it’d be on Yield Basis to deal with it to the highest degree possible,” Egorov wrote. 

Egorov added that inviting notable persons from the ecosystem as investors is natural for a project like Yield Basis. He said partner projects are Curve’s strength. 

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