cryptocurrency

Providing liquidity to #cryptocurrency AMMs often exposes users to impermanent loss (IL), a situation where holding tokens in a liquidity pool yields less value over time compared to simply holding the underlying assets.
YieldBasis (YB) offers a new solution for BTC liquidity providers aiming to avoid IL while earning trading fees. Using a leveraged liquidity model, YieldBasis maintains a 2x leverage position that closely tracks the price of BTC, eliminating IL and improving returns for liquidity providers.
How Does YieldBasis Work?
YieldBasis operates by creating a leveraged liquidity position in the Curve BTC/crvUSD pool. The process involves:
BTC deposit and receipt token: Users deposit BTC into YieldBasis and receive ybBTC tokens, which represent a claim on a 2x leveraged BTC/crvUSD liquidity pool position.Leveraged pairing with crvUSD: The protocol borrows an equivalent USD value of crvUSD (a stablecoin) against the liquidity pool position, maintaining a constant 2x compounding leverage, meaning a 50% debt-to-value ratio.Collateralized debt: The Curve LP token obtained from depositing BTC and crvUSD serves as collateral for the borrowed crvUSD debt.Auto-rebalancing: A built-in rebalancing mechanism incentivizes arbitrage traders to maintain the 2x leverage ratio by performing operations that adjust debt and LP holdings whenever BTC price changes.Fee earnings & staking options: Users can keep ybBTC unstaked to earn trading fees in BTC or stake ybBTC to receive YB token emissions. YB tokens can also be vote-locked to obtain governance rights and a share of BTC fees.
The Problem of Impermanent Loss
In traditional AMMs, impermanent loss occurs because the pool’s asset ratio regularly rebalances relative to price movements. This often causes liquidity providers’ position value to grow more slowly than just holding BTC.
For example, if the BTC price doubles, an AMM position rebalanced between BTC and stablecoins might end up worth about 5.7% less than simply holding BTC.
While some protocols offset potential losses through token incentives, these subsidies don’t eliminate the impermanent loss problem. YieldBasis tackles IL at its source by structuring leveraged LP positions to move exactly in line with BTC price, which effectively removes IL.
Leveraged Liquidity: The YieldBasis Solution
By pairing deposited BTC with borrowed crvUSD and maintaining a 2x leverage position, YieldBasis ensures the LP value tracks BTC price 1:1. Here’s what happens:
The protocol uses a dedicated collateralized debt position (CDP) to borrow crvUSD equal in USD value to the BTC deposit.Both assets are added together into the Curve BTC/crvUSD liquidity pool.The resulting LP token is collateral for the borrowed crvUSD debt.The system auto-rebalances to keep the debt exactly at 50% of the total LP value.Rebalancing is performed atomically by arbitrage traders interacting with the Rebalancing-AMM and VirtualPool, enabling the contract to mint or burn LP tokens and debt to restore the correct leverage after BTC price moves.
This structure leverages the mathematical properties of Curve’s pool and compounding leverage to eliminate the sublinear value drag seen in regular AMMs, thus killing impermanent loss and allowing liquidity providers to benefit fully from BTC price moves while still collecting trading fees.
Potential Risks
While YieldBasis eliminates the impermanent loss problem, there are some risks worth considering:
Smart contract risk: As with any DeFi platform, bugs or vulnerabilities in the smart contracts could potentially lead to loss of funds.Arbitrage and rebalancing dependency: YieldBasis relies on arbitrageurs to keep the leverage ratio stable; if these mechanisms fail or become inefficient, the position could deviate from its target leverage.Market risks: Sudden large price swings or low liquidity in the underlying pools could affect position stability and fee generation.Protocol and borrowing risks: The stablecoin crvUSD is borrowed on the platform; risks related to the stablecoin's stability or borrowing mechanism could impact overall position performance.
YieldBasis (YB) on Binance Holder Airdrops
On October 14, 2025, Binance announced YB as the 53rd project on the Binance Holder Airdrops. Users who subscribed their BNB to Simple Earn and/or On-Chain Yields products from October 9 to 11 were eligible to receive YB airdrops. A total of 10 million YB tokens were allocated to the program, accounting for 1% of the max total token supply.
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Cryptocurrency transactions are verified through a decentralized system designed to work without banks, payment processors, or any central authority. Instead of trusting a single institution, cryptocurrencies rely on cryptography, public ledgers, and consensus mechanisms to make sure every transaction is valid, secure, and irreversible. This verification process is the foundation of why digital currencies like Bitcoin and Ethereum can function as trustless systems.

At the core of every cryptocurrency is the blockchain, which can be understood as a public, shared ledger. This ledger records every transaction ever made on the network. Once information is written to the blockchain, it becomes extremely difficult to change, because copies of the ledger are stored across thousands of computers worldwide. Any attempt to alter past records would require changing the majority of these copies at the same time, which is practically impossible in large networks.

A cryptocurrency transaction begins when a user sends funds from their wallet to another address. This action creates a transaction message that includes the sender’s address, the recipient’s address, the amount being sent, and other technical details. The sender does not “move” coins in a physical sense. Instead, they use their private key to generate a digital signature. This signature proves ownership of the funds and confirms that the transaction was authorized by the rightful owner, without revealing the private key itself.

Once created, the transaction is broadcast to the network. Thousands of independent computers, called nodes, receive this transaction and begin checking it. These checks are automatic and rule-based. Nodes verify that the digital signature is valid, that the sender actually has enough balance, and that the coins being spent have not already been used in another transaction. If the transaction fails any of these checks, it is rejected and never added to the blockchain.

Valid transactions are temporarily stored in a pool of unconfirmed transactions. From there, they are grouped together into a block. Before this block can be added to the blockchain, the network must agree that it is legitimate. This agreement process is known as consensus, and it is what replaces the role of banks or clearinghouses in traditional finance.

One of the earliest and most well-known consensus mechanisms is Proof of Work. In this system, specialized participants called miners compete to add the next block to the blockchain. They do this by solving complex cryptographic puzzles that require significant computational power. Solving these puzzles is difficult and time-consuming, but verifying the solution is easy for other nodes. When a miner finds a valid solution, they broadcast it to the network. Other nodes independently verify the work, and if everything checks out, the new block is added to the blockchain. The miner is then rewarded with newly created cryptocurrency and transaction fees. This process makes attacks extremely expensive, because altering the blockchain would require redoing enormous amounts of computational work.

Proof of Stake takes a different approach. Instead of relying on energy-intensive calculations, it selects validators based on the amount of cryptocurrency they lock up as collateral, known as staking. Validators are chosen to propose and confirm new blocks according to predefined rules. Because validators have their own funds at risk, they are financially motivated to act honestly. If they attempt to validate fraudulent transactions or manipulate the system, they can lose part or all of their staked coins through a process called slashing. This system dramatically reduces energy usage while still maintaining strong security. Many modern blockchains use Proof of Stake or variations of it because of its efficiency and scalability.

Once a block is added to the blockchain, transactions inside it receive their first confirmation. Each additional block added after that counts as another confirmation. Confirmations matter because they increase the cost and difficulty of reversing a transaction. The more confirmations a transaction has, the more secure it is considered. Different blockchains and applications require different confirmation thresholds depending on their security needs. High-value transfers usually require more confirmations before being considered final.

The verification process also solves two major problems that once made digital money impractical. The first is double-spending, where the same digital funds could be copied and spent more than once. The blockchain prevents this by maintaining a single, shared history of transactions that everyone agrees on. The second problem is trust. Traditional systems require users to trust banks, governments, or corporations. Cryptocurrencies replace this trust with transparent rules, open verification, and cryptographic proof.

Every verified transaction strengthens the network. Because verification is performed by many independent participants rather than a single authority, the system is resilient against fraud, censorship, and single points of failure. This is why cryptocurrency networks can operate globally, 24/7, without permission from any institution.

In the end, cryptocurrency transaction verification is not just a technical detail. It is the reason digital currencies can exist as decentralized systems. Through cryptography, public ledgers, and consensus mechanisms like Proof of Work and Proof of Stake, cryptocurrencies create a system where trust is built into the technology itself. Understanding this process helps explain why millions of people use cryptocurrencies with confidence, even in the absence of banks or centralized control.

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