@Sakura please summarize this article, thanks uwu.
TLDR:
The article discusses a new Automated Market Maker (AMM) design called Yield Basis (YB) that aims to generate sustainable Bitcoin yields while mitigating impermanent loss.
Key Points:
Yield Basis (YB) targets sustainable BTC yields of 9%–60% by turning BTC into a productive asset.
Impermanent Loss Mitigation: YB uses compounding leverage and a funded rebalance budget to reduce impermanent loss.
Dynamic LP Exposure: The AMM adjusts liquidity provider (LP) exposure based on BTC price movements.
Historical Performance: Backtests show an average ~20% BTC APR from 2019–2024, with spikes up to ~60% during volatile periods.
Infrastructure Adoption: The article outlines conditions for YB’s adoption and its potential impact on the BTC yield landscape.
In-depth summary:
The article introduces Yield Basis (YB), a novel AMM design that aims to unlock on-chain Bitcoin liquidity and generate sustainable yields. Traditional yield sources often suffer from impermanent loss and require heavy incentives, making them less attractive. YB restructures LP exposure to track BTC prices linearly, allowing for efficient yield generation without relying on subsidies. This innovative approach aims to provide a more stable and reliable yield for Bitcoin holders.
YB’s mechanism involves a continuous rebalancing strategy funded by pool fees and borrow costs, which helps maintain liquidity near optimal levels even during price fluctuations. The article highlights that while many current yield sources are fragmented and often denominated in altcoins, YB seeks to create a more robust and BTC-focused yield environment. Historical backtests indicate that YB could achieve an average APR of around 20%, with potential spikes during periods of high volatility.
The author emphasizes the importance of understanding the risks associated with YB, including the potential for sharp BTC drawdowns and stablecoin peg disturbances. However, if YB can deliver on its promises and secure consistent order flow, it could become a foundational element in the on-chain BTC yield landscape, offering a viable alternative to traditional yield farming methods.
ELI5:
Yield Basis (YB) is like a special tool that helps people earn money from their Bitcoin without losing too much when prices change. It uses smart strategies to keep track of Bitcoin prices and make sure that people can earn good returns. The article explains how this tool works and why it could be a better way to earn money from Bitcoin compared to other methods that often don’t work well.
Writers main point:
The primary point of the article is that Yield Basis (YB) offers a promising solution to generate sustainable Bitcoin yields while addressing the challenges of impermanent loss and market volatility.