Curve DAO is considering a proposal to pre-mint 60 million crvUSD to support its new Yield Basis AMM, a mechanism designed to use leveraged Bitcoin pools to eliminate impermanent loss while boosting yield. The crvUSD would be borrowed and paired with BTC in liquidity positions rather than sold on the open market, avoiding direct dilution of circulating stablecoin supply.

Proposed by Curve founder Michael Egorov, Yield Basis is expected to launch with three capped pools, each for BTC wrappers, with deposit limits of about US$10 million per pool. The proposal claims that Yield Basis returns value to both veYB holders and to Curve / veCRV holders through trade-and-fee flows, vote incentives, and other revenue mechanisms.

However, the plan has met with resistance in Curve's governance forums. Critics warn that pre-minting unbacked crvUSD introduces systemic risk, including potential for unmanageable supply growth, governance overreach, and threats to the peg of crvUSD. One commenter described the risk of minting“out-of-thin-air, unbacked, 60M crvUSD”. Some community members argue the DAO's current permissions already allow arbitrary minting of crvUSD, a concern in light of past vulnerabilities.

Risk mitigation is a major topic of debate. Suggestions include turning the pre-mint into a strict credit line structure, with per-pool limits, a governance-controlled kill-switch, staged rollout starting with a single BTC wrapper, insurance or first-loss vaults, and better transparency via telemetry dashboards. Yield Basis proponents have responded by noting that the protocol has passed six audits to date, is running a Sherlock bug bounty, and intends to enforce caps at launch. They emphasise that crvUSD in Yield Basis is minted only when BTC is deposited.

Scale and revenue projections form a core of the discussion. The proposal argues that Yield Basis solves what's known as the demand-side absorption issue for crvUSD: rather than minting tokens that are sold, pairing them internally with BTC leverages LP positions, creating supply sinks and revenue flows. Fee distributions-from arbitrage trades, stablecoin pair pools involving crvUSD, and trading commissions-are structured to benefit veCRV holders, veYB holders, and liquidity providers. The DAO ecosystem is slated to receive a share of YB token inflation for vote incentives in major stablecoin pools.

Stakeholders are closely watching governance dynamics. veCRV voting power is fragmented, voter turnout on high-stakes proposals is variable, and some members say optics could affect market confidence. The precedent set by this mint could influence how future protocol decisions are made.

Arabian Post – Crypto News Network

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