In 2025, Yield Basis got decent traction with its IL-free AMM pools, generating 12-22% of organic (non-subsidized) yield for BTC LPs.

The best time to go beyond Bitcoin is now. The ticker is $ETH.

Ethereum utilization in DeFi is significant. However, 99% of it is used for staking, restaking, or lending. The largest on-chain ETH-stable pools have a TVL of ~$235 million.

https://defillama.com/yields?token=WETH&category=Dexs

Why only a tiny fraction of ETH deposited to AMM pools? The answer is Impermanent Loss.

Despite high yields in those pools, the overwhelming majority of ETH holders prefer to safely stake ETH, not exposing the possible upside to risks.

Solving impermanent loss is the next chapter of Ethereum Defi adoption.

For the backtesting, two years of historical ETH price data were taken (2024-2026); and the performance of a Yield Basis system (Cryptopool + Releverage AMM) based on that data.

As a result, the LP position generated ~16% returns over two years:

https://github.com/yield-basis/yb-simulations/blob/master/ethusd/2-years-up/24.%20releverage%20A2.5%20dynfee%20long/growth.png

The parameters for the pool and the associated infrastructure were as follows:

• Cryptopool parameters

• Price scale adjustment step upper bound: 0.5%

• Liquidity concentration parameter A = 2.5

• Minimal fee (balanced state): 0.43%

• Maximum Fee (imbalanced state): 2.4%

• Fee gamma (dynamic fee curve shape parameter): 0.0023

• EMA half-lfie: 600 s (1/e time = 866 s)

• Borrow/refuel rate: 0.55%

• Initial invariant (D): 2e7 USD

The Pool imbalance vs. ETH spot price is presented below:

Key simulations results:

• Dynamic swap fee in 0.43-2.4% range maximize LP profit by minimizing value extracted in arbitrage trades

• During the long-lasting periods of pool imbalance LPs consistently generate fees resulting in position growth

• The average APY was 8% in 2024-2026

The results in this section are for educational purposes only and do not constitute investment advice. Backtesting results do not guarantee future performance.

The proposed pool is free from impermanent loss, which benefits long-term ETH LPs.

However, it has a dynamic fee ranging from 0.43% to 2.4%, which is higher than the typical Uniswap fee of 0.05% to 0.30%. As mentioned previously, the Yield Basis pool fee structure is optimized to maximize LP returns and minimize arbitrage value extraction.

We consider pools with this structure to act as a Liquidity Backbone.

They will facilitate large trades and liquidations during periods of high volatility, as well as increase the instant availability of ETH liquidity within the ecosystem. Small, routine swaps could use pools with lower-fee trades.

Prior to moving forward to Ethereum pool launch, the underlying Curve cryptopools infrastructure was updated (read the recent Curve DAO proposal). This update improves efficiency for newly-launched pools decreasing the value extracted through arbitrage swaps.

We propose using WETH as the deposit asset in the pool: it is the most widely adopted ERC-20 version of ETH and offers superior arbitrage options (instant & free redemption).

The pool launch process:

• The official proposal for launching WETH-crvUSD pool will be added to the YB DAO governance

• Once proposal is passed, the pool will be deployed and added to the gauge (what enables emissions based on veYB voting for this pool)

Please note that the pool will have a limited capacity and will be available on a first-come, first-served basis.

Disclaimer: YieldBasis operates in accordance with applicable MiCA and AML/CFT requirements. This publication is intended solely for informational purposes and does not constitute financial advice, solicitation, or an offer to invest. Past performance does not guarantee future results. All distributions are executed programmatically on-chain and remain subject to governance approval and smart-contract conditions.

In 2025, Yield Basis got decent traction with its IL-free AMM pools, generating 12-22% of organic (non-subsidized) yield for BTC LPs.

The best time to go beyond Bitcoin is now. The ticker is $ETH.

Ethereum utilization in DeFi is significant. However, 99% of it is used for staking, restaking, or lending. The largest on-chain ETH-stable pools have a TVL of ~$235 million.

https://defillama.com/yields?token=WETH&category=Dexs

Why only a tiny fraction of ETH deposited to AMM pools? The answer is Impermanent Loss.

Despite high yields in those pools, the overwhelming majority of ETH holders prefer to safely stake ETH, not exposing the possible upside to risks.

Solving impermanent loss is the next chapter of Ethereum Defi adoption.

For the backtesting, two years of historical ETH price data were taken (2024-2026); and the performance of a Yield Basis system (Cryptopool + Releverage AMM) based on that data.

As a result, the LP position generated ~16% returns over two years:

https://github.com/yield-basis/yb-simulations/blob/master/ethusd/2-years-up/24.%20releverage%20A2.5%20dynfee%20long/growth.png

The parameters for the pool and the associated infrastructure were as follows:

• Cryptopool parameters

• Price scale adjustment step upper bound: 0.5%

• Liquidity concentration parameter A = 2.5

• Minimal fee (balanced state): 0.43%

• Maximum Fee (imbalanced state): 2.4%

• Fee gamma (dynamic fee curve shape parameter): 0.0023

• EMA half-lfie: 600 s (1/e time = 866 s)

• Borrow/refuel rate: 0.55%

• Initial invariant (D): 2e7 USD

The Pool imbalance vs. ETH spot price is presented below:

Key simulations results:

• Dynamic swap fee in 0.43-2.4% range maximize LP profit by minimizing value extracted in arbitrage trades

• During the long-lasting periods of pool imbalance LPs consistently generate fees resulting in position growth

• The average APY was 8% in 2024-2026

The results in this section are for educational purposes only and do not constitute investment advice. Backtesting results do not guarantee future performance.

The proposed pool is free from impermanent loss, which benefits long-term ETH LPs.

However, it has a dynamic fee ranging from 0.43% to 2.4%, which is higher than the typical Uniswap fee of 0.05% to 0.30%. As mentioned previously, the Yield Basis pool fee structure is optimized to maximize LP returns and minimize arbitrage value extraction.

We consider pools with this structure to act as a Liquidity Backbone.

They will facilitate large trades and liquidations during periods of high volatility, as well as increase the instant availability of ETH liquidity within the ecosystem. Small, routine swaps could use pools with lower-fee trades.

Prior to moving forward to Ethereum pool launch, the underlying Curve cryptopools infrastructure was updated (read the recent Curve DAO proposal). This update improves efficiency for newly-launched pools decreasing the value extracted through arbitrage swaps.

We propose using WETH as the deposit asset in the pool: it is the most widely adopted ERC-20 version of ETH and offers superior arbitrage options (instant & free redemption).

The pool launch process:

• The official proposal for launching WETH-crvUSD pool will be added to the YB DAO governance

• Once proposal is passed, the pool will be deployed and added to the gauge (what enables emissions based on veYB voting for this pool)

Please note that the pool will have a limited capacity and will be available on a first-come, first-served basis.

Disclaimer: YieldBasis operates in accordance with applicable MiCA and AML/CFT requirements. This publication is intended solely for informational purposes and does not constitute financial advice, solicitation, or an offer to invest. Past performance does not guarantee future results. All distributions are executed programmatically on-chain and remain subject to governance approval and smart-contract conditions.