yb-LP
When users deposit crypto into YieldBasis (BTC, ETH), they receive yb-LP tokens (called LT in the smart contracts). Each yb-LP token represents a proportional share in a leveraged Crypto/crvUSD position. Liquidity can be withdrawn at any time, just like in regular pools, with no minimum deposit requirements.
These LP tokens track the underlying crypto price movements 1:1 while earning trading fees. By design, the protocol eliminates traditional Impermanent Loss (IL) found in standard AMMs. This 1:1 tracking is achieved through 2× compounding leverage mechanics. The fee distribution mechanism is dynamic: the protocol splits yields between trading fees and YB tokens, allowing users to choose their preferred strategy.
Multi-Crypto-Wrapper Support: YieldBasis will support depositing different wrapped versions of Crypto across various chains. For example, depositing cbBTC will give users yb-cbBTC, WBTC will give users yb-WBTC, and so on.
Earning with unstaked yb-LP tokens
After depositing crypto and receiving yb-LP tokens, users have two earning strategies available that maintain a built-in economic balance:
Hold yb-LP tokens, earn organic yield
- Hold your yb-LP tokens to earn trading fees directly from the underlying Crypto/crvUSD pools
- APR increases as more yb-LP tokens are staked for $YB emissions (stakers forfeit their trading fees)
- Provides yield from real trading activity
Understanding Value Fluctuations
While yb-LP tokens track the value of the underlying crypto 1:1, you may observe temporary fluctuations (Temporary Redemption Discount (TRD)) in your balance or redemption rate. This is normal and stems from two sources:
- Pool Imbalance (TRD): When BTC price moves rapidly, LP value changes but debt doesn't. This causes leverage to drift from 2x. Arbitrageurs restore the 50% debt ratio by trading against the LEVAMM, and the discount resolves.
- Volatility Decay: Each time arbitrageurs restore 2x leverage, they take a small profit. This is the cost of maintaining leverage. In healthy markets, trading fees accumulate faster than these costs.
When the market moves violently, the redemption rate of yb-LP tokens may temporarily dip due to arbitrage lag. This usually resolves automatically as the pool stabilizes and collects fees.
Earning with staked yb-LP tokens
Stake yb-LP tokens, receive $YB emissions
- Stake your yb-LP tokens to earn $YB governance tokens instead of trading fees
- Give away immediate yield for future YB -> veYB yields
Staked Value Fluctuations
Just like the unstaked token, the underlying value of your staked position tracks the value of your crypto. However, due to Pool Imbalance and Volatility, Temporary Redemption Discount (TRD) may occur, which may cause the redeemable amount of Crypto to fluctuate in the short term.
The protocol does not charge admin fees on "losses." If the fundamental value of the token drops due to volatility decay, the protocol pauses its own fee collection to accelerate your recovery.
Dynamics between Unstaked and Staked
The protocol creates natural incentives: when staking rates are high, unstaked holders earn more fees while stakers receive fewer emissions. This dynamic equilibrium encourages both strategies to coexist.
Fee Distribution: For a detailed visual explanation of how fees are distributed between unstaked yb-LP token holders and veYB holders, see the Fees page.