Let's talk about Yield Basis. First, the conclusion: Product: It's just another DeFi project that is doing fancy renovations in a shell, which is not surprising if it's Michael. Initial investment: A gamble, feeding the Kraken retail investors. The product documentation is quite cryptic and seems to approach a perpetual challenge in DeFi—impermanent loss. The specific approach is to use BTC as collateral, borrow CrvUSD, and pool it in Curve. With LP as collateral, a 1:1 leverage can be achieved. As the price of BTC fluctuates, this asset combination ($1 crvUSD asset + $1 CrvUSD liability + $1 BTC equivalent asset) will continuously rebalance to maintain the asset ratio. To put it more directly, if BTC decreases, buy it back; if BTC increases, sell a bit. Currently, some AMM hedging strategies use this method as well. Generally speaking, AMM hedging tends to lose money, but under the mechanisms of VirtualPool and Rebalancing-AMM, such hedging trades can yield positive returns, thus achieving impermanent loss avoidance based on BTC. So, the claim that Yield Basis solves impermanent loss isn't entirely wrong, but to be precise, it only addresses impermanent loss in specific scenarios, akin to solving a linear equation and finding a general solution rather than a particular one. The source of Yield Basis's positive returns is the arbitrage opportunities in the Curve AMM pool under price fluctuations. This "particular solution" is not limited to pools and tokens; there are more external constraints. As we know, matter is conserved. If Yield Basis generates positive returns, who is losing money? Clearly, it's the arbitrageurs who are losing money, specifically the non-Yield Basis LPs in the AMM pool. To illustrate with a more vivid example, there exists a group of scissors and a group of retail investors; the scissors make money by cutting the retail investors. If there are too many scissors, there won't be enough retail investors to cut, so the premise for Yield Basis to achieve its ideal effect is that Yield Basis cannot occupy too high a proportion of the entire Curve Pool. Next, we will find something interesting: currently, the TVL of Yield Basis is 3 million, with each pool at 1.02 million, and coincidentally, the three BTC corresponding to the CrvUSD pools have a TVL of 2.04 million each. This means Yield Basis occupies 50% of the TVL. So the question arises: if the pool is opened up and the number of remaining LPs remains unchanged, can Yield Basis still grow while maintaining a 9%+ APY?

It's certain that someone will say at this point, the above mentioned does not take into account the real Trading fees. So if the Trading fees come up, won't the scalpers and the retail investors make money together? Unfortunately, that's not the case either. First, if you are an LP, would you choose to earn stable returns through Yield Basis, or directly join LP as a retail investor? Second, the three pools bound by Yield Basis currently have only 1.5 million in daily trading volume. For a trading pair like BTC, which has high liquidity, multiple participants, strong depth, and a large number of market makers, AMM has a natural disadvantage, and there is no reason for a large amount of trading to occur. Now let's look at the economic model and valuation. First, let's be a bit optimistic. Regardless of the reason, Yield Basis's TVL has increased tenfold to 30 million. Then users, for some unknown reason, stubbornly insist on trading in the Curve pool, and the trading volume increases threefold. According to the economic model, 50% of the trading fees from the BTC/crvUSD pool are allocated to the unstaked ybBTC holders and veYB holders, assuming veYB takes 50%. The annual fee capture for veYB = (2.31% + 1.54% + 2.12%) / 3 * 30m * 50 * 50% = $1.34 million. Based on a 200 million FDV, around 150x PE, this means that only in a very optimistic scenario would the opening FDV of Yield Basis be an extremely exaggerated figure. Now, if we calculate based on the current data: The annual fee capture for veYB = (2.31% + 1.54% + 2.12%) * 3m * 50% * 50% = $44,700. Based on a fundraising scale of 5 million, this means the tax revenue for Goose City will be realized 111 years later.