Curve's decentralized autonomous organization (DAO) has approved a proposal to provide a credit line of 60 million crvUSD for the protocol before the launch on the Yield Basis mainnet. Yield Basis is developed by Curve founder Michael Egorov.
This vote paves the way for the launch of a Bitcoin-centric liquidity pool on Yield Basis, aimed at reducing impermanent loss caused by asset value fluctuations in the liquidity pool, aligning more closely with Chinese expression habits. The protocol is also committed to unlocking Bitcoin-related yield opportunities in the decentralized finance (DeFi) space.
According to the plan, three major liquidity pools, including WBTC, cbBTC, and tBTC, will adopt Yield Basis's automated market maker (AMM) mechanism on Ethereum. Curve Finance stated that these liquidity pools will initially set a cap of 10 million dollars.
This move aims to expand the Curve ecosystem, integrating its native stablecoin more deeply into DeFi infrastructure and enhancing the potential fee income for veCRV token holders, where veCRV is the voting-locked version of Curve Finance's governance token CRV.
Cointelegraph sought more information from Curve but had not received a response by the time of publication.
Not all Curve DAO members support the proposal. On September 18, social media figure Small Cap Scientist stated that the plan exposes Curve to significant risks.
The user posted on the X platform that the proposal is "extremely exploitative" for the DAO. He warned that the economic risks of Yield Basis have not been assessed by a third party, and that the 60 million credit line is not tied to a cap related to the total locked value (TVL) of crvUSD. He also pointed out that if the new protocol suffers a hack, Curve may need to bear the responsibility for the stolen funds.
This community member also expressed concerns about the transparency of information regarding Yield Basis's seed investors and the incompleteness of the token economic model. He believes that the protocol should not gain control over crvUSD without stronger protective measures in place.
Michael Egorov responded to the related concerns. In a reply on the X platform, Michael Egorov stated that Yield Basis has completed six rounds of audits, with a seventh round currently underway. He also noted that Curve's Emergency DAO multi-signature management has an emergency stop mechanism as a protective measure.
He assured the community that Yield Basis would take responsibility for any vulnerabilities and stated that details of investor allocations have been included in the governance proposal.
"If anything happens, Yield Basis will certainly do its utmost to address it," Michael Egorov wrote.
Michael Egorov added that it is common practice for projects like Yield Basis to invite well-known figures within the ecosystem to participate in investments. He believes that collaborative projects are an advantage for Curve.
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Original article: “Curve DAO supports providing a 60 million crvUSD credit line for the new protocol”
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