Crypto investors have long faced a difficult trade-off in decentralized finance: earn yield on their assets or keep full exposure to price gains. This challenge is especially clear in bitcoin liquidity provision. In traditional automated market maker strategies, a sharp rise in Bitcoin can leave liquidity providers worse off than investors who simply held the asset. According to Yield Basis, a 2x move in Bitcoin can put LPs about 5.7% behind passive ownership. That gap has made onchain liquidity strategies harder to justify for long-term holders.
Recent activity suggests users are looking for a middle ground between yield and exposure. Deposits into Yield Basis’ newly launched strategy grew from 1.7 million crvUSD to 3.8 million crvUSD in less than two weeks. That is an increase of more than 120%.
Michael Egorov, founder of Curve Finance and Yield Basis, said the trend shows rising demand for infrastructure that makes crypto assets more productive. “Investors are increasingly looking for ways to generate yield or access liquidity without fully exiting their positions,” Egorov explained. He added that this gives users more flexibility across different market conditions.
Hybrid Vaults Aim to Combine Exposure and Yield
Yield Basis was designed to generate Bitcoin and Ether-denominated yield while reducing the impermanent loss common in AMM-based liquidity provision. The protocol’s model lets users deposit Bitcoin and borrow an equal value of crvUSD. That creates a 2x leveraged Bitcoin/crvUSD liquidity position on Curve. A built-in AMM and virtual pool automatically rebalance the position.
By keeping debt at 50% of the position, Yield Basis says the LP value can move 1:1 with the bitcoin price. That helps users maintain exposure while earning trading fees. Rebalancing is handled by the protocol, with costs covered by interest on borrowed crvUSD.
In May 2026, Yield Basis introduced Hybrid Vaults. These combine crypto assets with yield-bearing crvUSD positions. The design allows users to earn both crypto-denominated yield and stablecoin-based yield within one strategy.
Protocol Activity Builds
The early traction comes as Yield Basis reports broader growth. The protocol has surpassed $3.3 billion in cumulative trading volume and generated $3.95 million in protocol fees. Total value locked stands at about $126 million, including more than $100 million across Bitcoin pools.
The latest Hybrid Vault activity includes liquidity from WETH and cbBTC pools. From May 25 to June 9, deposits rose by about 2.1 million crvUSD.
For DeFi, the appeal is straightforward. If protocols can offer yield without forcing investors to sacrifice upside exposure, liquidity provision may become more attractive to long-term Bitcoin and Ether holders. The challenge will be proving that the model can hold up in live markets, not just backtests. Yield Basis appears to be making progress, but the real test will come during volatile market conditions.
