LONDON (IT BOLTWISE) – Yield Basis, a protocol from Curve Finance founder Michael Egorov, has activated its fee switch to route revenue to token holders. Since launching in September, over 17 Bitcoin have been collected and can now be claimed by specific users.
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Yield Basis, a protocol developed by Michael Egorov, the founder of Curve Finance, recently activated its fee switch. This measure aims to pass revenue directly to token holders. Since the protocol’s launch in September, investors have deposited over $130 million worth of Bitcoin. These deposits have allowed the protocol to accumulate more than 17 Bitcoin, which can now be claimed by certain users within a four-week period.
The activation of the fee switch was unanimously approved by Yield Basis token holders. This decision reflects a growing trend in the crypto industry where protocols are under increasing pressure to give their tokens value beyond mere voting rights. While some protocols like Curve have been sharing revenue with their users since 2020, this trend has accelerated this year. Major DAOs like Uniswap, Ethena, Aave, and Jito have approved token buybacks or fee switches to increase value for frustrated token holders.
Yield Basis was designed to solve the problem of impermanent loss that has plagued decentralized exchanges since their inception. These losses occur when liquidity providers deposit their tokens into pools, thereby missing out on potential profits they would have made by holding the tokens. Yield Basis uses a leveraged trading strategy to avoid this loss in Curve’s Bitcoin crvUSD pool. Investors holding the YB token can lock it to claim a portion of the revenue provided by the protocol.
Although the distribution of income to token holders is becoming increasingly popular, there is also criticism. Some market analysis has shown that buyback programs are often inefficient, overspending when prices are high and underinvesting when prices are falling. Still, Egorov argues that the growth of protocols often comes in the form of token incentives, but these lose value when the tokens themselves have no value beyond governance rights. In order to increase the value of the tokens, a form of fee distribution is necessary.
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