Skip to main content

yb-LP tokens

When you deposit into a YieldBasis market, you receive yb-LP shares. A yb-LP share is an ERC-20 token: your pro rata claim on a 2× leveraged Curve Cryptoswap liquidity provider (LP) position.

A classic AMM LP share versus a yb-LP share​

In a classic automated market maker (AMM), such as a constant-product (x * y = k) pool, an LP share is a pro rata claim on two assets. When the market price of the volatile asset moves, the share's value falls below the value of the same two assets held outside the pool. That shortfall is impermanent loss (IL). The shape of the LP value function causes it. IL starts the moment the price moves away from the pool's deposit point, even before a trader acts on it.

A yb-LP share is a claim on the same kind of pool position, held at 2× leverage: borrowed crvUSD finances the crvUSD side. The 2× leverage offsets the LP's underperformance, so the share's value tracks the volatile asset one-to-one. Trading fees accrue on top, minus borrow interest and rebalancing cost. For why 2× is the leverage that offsets IL, read Compounding leverage.

Two ways to hold yb-LP​

You can hold yb-LP unstaked or staked. Each mode keeps the share in a different place and earns from a different source:

  • Unstaked. The yb-LP stays in your wallet, and you can transfer it like any ERC-20 token. It earns Fundamental yield (shown as FT APY in the app): Fundamental Value growth from trading fees. Fundamental Value is the value of one share on the vault's books.
  • Staked. The yb-LP sits in the gauge, the market's staking contract. It earns Emissions APR (shown as Token APR in the app): YB emissions. You hold gauge shares, which are transferable ERC-20 tokens. The yb-LP inside the gauge moves only when you unstake.

Never add the two rates for one staked position. To choose a mode, compare the YB emissions on your gauge, priced in USD, with the Fundamental Value growth that you give up. For that comparison and a breakeven example, read Staked and unstaked economics.

Losses and the watermark​

Both modes take their pro rata share of losses. Only staked positions have a watermark, the level that their value must regain after losses. While a staked position sits below its watermark, your staked shares can redeem for less than you deposited. For how the gap opens and closes, read Watermark and recovery.

How new shares are priced​

LT, the market's vault contract, mints new shares at the current Fundamental Value. You receive shares for the value that your deposit adds to the position, after the Curve pool's deposit fee and slippage. Existing holders keep the pool fees from your deposit. They also carry any loss that your deposit causes by moving price_scale, the pool's internal price.

The following example ignores the pool deposit fee and slippage. The cbBTC vault has 100 shares outstanding, and Fundamental Value is 1.0 cbBTC per share. A 10 cbBTC deposit mints 10 new shares (total: 110). Later, fees raise Fundamental Value to 1.05. Another 10 cbBTC deposit then mints 10 / 1.05 ≈ 9.524 new shares.

What a withdrawal returns​

The vault accounts for your share at its Fundamental Value, but a withdrawal returns the Redemption Value. Redemption Value reads live pool state. The gap between the two values is the Temporary Redemption Discount (TRD). The gap can take weeks to close. If you withdraw while Redemption Value is lower, you receive the lower amount. For how to read both values before you withdraw, read Fundamental Value, Redemption Value, and TRD.