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FAQ

Balance Fluctuations & Recovery​

Why did my balance drop?​

You are observing a Temporary Redemption Discount (TRD).

  • The Cause: Maintaining 2x leverage requires constant rebalancing. In stable markets, trading fees easily cover these costs. However, during rapid price moves (high volatility), the cost of rebalancing can temporarily exceed fees, or pool imbalances can create a lag in value.
  • The Effect (TRD): This results in a temporary discount where your redeemable value is slightly below the target. This is not a permanent loss unless you withdraw immediately.
  • The Fix: The protocol enters Recovery Mode (see below), using 100% of new revenue to eliminate this discount before taking any profit for itself.

Why don't I see Admin Fees accruing?​

Short Answer: The protocol is currently below its High Watermark. When this happens, 100% of revenue is used to recover LP value, and the protocol waives its own fees.

Understanding the Watermark Mechanism: The protocol tracks a High Watermark—the highest recorded Price-Per-Share (or 1:1 peg for stakers).

  1. The Drop (TRD): High volatility can cause the current share value to dip below this Watermark (creating a Temporary Redemption Discount).
  2. The Recovery: When the share price is below the Watermark, the protocol automatically pauses Admin Fees.
  3. The Result: Even if trading volume is massive, you will not see Admin Fees accrue. Instead, that revenue is actively filling the gap between the current price and the Watermark.

Once the Watermark is reached again, normal fee distribution resumes.

How fast is the recovery?​

Recovery speed depends entirely on Trading Volume vs. Volatility.

  • Stagnation: If the price trends down slowly with low volume, fees accumulate slowly. The protocol stays in Recovery Mode longer, slowly erasing the TRD over days or weeks.
  • Sideways: In calm markets, costs are low, and the protocol quickly exits Recovery Mode and resumes distributing Admin Fees.
  • High Volume: If the market is volatile but active, massive trading fees generated by the pool are poured back into your position. Recovery can be very fast, even if you don't see "Admin Fees" ticking up.

Is this the same as Impermanent Loss?​

No.

  • Impermanent Loss (Standard AMMs): A structural loss caused by the divergence of asset prices. Even if fees are high, you often cannot recover the full value relative to holding.
  • Volatility Decay (YieldBasis): This is a "maintenance cost" for rebalancing your leverage. Unlike IL, you do not need the price to return to recover. You only need the system to cover the costs for rebalancing. As long as trading volume exists, the system closes the redemption discount, regardless of where the price goes.

Tokens & Vaults​

What's the difference between sybBTC and ybBTC?​

ybBTC (Yield Bearing / Unstaked):

  • You hold the LP token directly.
  • Yield: You earn a share of trading fees.

sybBTC (Staked Vault):

  • You deposit your LP tokens into the Staker (Gauge).
  • Yield: You forgo organic trading fees to earn $YB emissions (governance tokens).
  • Peg: Ideally maintains a 1:1 ratio with BTC.

How do the two tokens interact during a drawdown?​

  • Shared Lag: If the main pool experiences a lag (drawdown), both tokens will show a temporary value drop.
  • Recovery Mode: If sybBTC drops below its peg, the protocol activates Recovery Mode. It automatically redirects 100% of Admin Fees to the pool until the loss (v_st_loss) is fully covered.
  • V2 Stability: In the updated pools, losses are significantly smaller (estimated 10-20x less) during similar volatility compared to legacy pools.

How do I actually receive trading fees?​

Trading fees are automatically compounded into the value of your token.

  1. Generation: The AMM generates fees from traders.
  2. Collection: The protocol collects these fees via collect_fees.
  3. Distribution: The value is added to the total pool liquidity. This increases the amount of BTC redeemable for every 1 ybBTC. You do not need to manually claim BTC fees.

Temporary Redemption Discount (TRD)​

What is Temporary Redemption Discount (TRD)​

Pools may become imbalanced during high volatility, causing discounts on redeeming ybBTC or staked ybBTC. Arbitrage and swaps naturally rebalance them with time, reducing the discount to 0.

Where can i check the current TRD?​

The current TRD can be checked on a special analytics page on the YieldBasis UI: Analytics. The TRD can be checked on the right side of the table.

TRDTRD

Migration & Troubleshooting​

Why is there a protocol update (V1 to V2)?​

The V2 update fixes an issue in the legacy vault where volatility caused excessive fluctuations for staked users.

  • Legacy (V1): Staked positions could experience new losses before recovering from previous ones.
  • Updated (V2): Changes the value calculation to use price_scale consistent with the AMM.
How YieldBasis worksHow YieldBasis works

The code is publicly available for both versions: (1) the legacy code in question (2) the updated version.

Why do I see "Debt too high" when migrating or depositing?​

Error: Debt too high Cause: The pool has reached its current capacity (specifically the crvUSD debt limit) and cannot currently accept new funds.

LPs who have not yet migrated can wait and try again later. Space becomes available when other users withdraw or when the protocol raises the debt limit*.

Important: Migration is not time-limited. You can migrate your position as soon as capacity opens up

*Note: Raising the debt limit requires a Curve DAO vote.

Why do I see "Not enough out" during migration?​

Error: Not enough out Cause: This is a slippage error, the migration contract checks if the amount of new tokens you receive matches your minimum expectation.

Increase your slippage tolerance slightly in the UI (e.g., from 0.1% to 0.5%). Volatility can cause the exchange rate to shift slightly between the time you sign the transaction and when it is processed.

Do I Need to Migrate?​

When Curve cryptoswap pools are very imbalanced, it might make sense to wait for a more rebalanced state to migrate to the new version. Pool imbalance can be checked via the Curve UI by searching for the YB pools.

How does migration work?​

YieldBasis uses a dedicated LTMigrator contract to handle this in one transaction:

  1. Withdraw: It withdraws assets from your V1 position.
  2. Exchange: It moves the liquidity to the new system.
  3. Deposit: It calls deposit on the new V2 position. Your accumulated fees and emissions are preserved during this process.

Protocol Update: Legacy vs Updated Vaults​

Why is there a protocol update?​

The YieldBasis team identified an issue in the legacy vault (v1) implementation that causes excessive value fluctuations, particularly affecting staked vault depositors. An updated vault (v2) has been developed that significantly reduces these fluctuations.

The code is publicly available for both versions: (1) the legacy code in question (2) the updated version.