Original author: Umbrella, Deep Tide TechFlow

In mid-September, Kraken Launch, a token issuance platform jointly launched by the veteran exchange Kraken and ICO platform Legion, is about to launch its first project Yield Basis. This move marks Kraken as another mainstream exchange to deploy Launchpad business after Binance and OKX.

As the first project, Yield Basis was developed by Michael Egorov, the founder of the well-known DeFi project Curve. This BTCFI protocol, which aims to provide impermanent loss protection for BTC holders, has attracted widespread attention and discussion in the crypto market.

To understand the market's expectations for Kraken Launch and Yield Basis, we need to review the performance of other exchanges' Launchpads and the investment logic behind them.

History of IPOs on exchanges

Over the past year, major exchanges have achieved impressive returns through Launchpad. Binance Alpha's monthly trading volume once surpassed 1,500 units. While OKX's recent launch of X Launch has been subject to controversy, the X Launch tutorial has been a major trend in crypto communities, demonstrating the market's eager anticipation for this type of product.

Many projects launched through the exchange Launchpad have also performed well in the market. $MYX, which was launched through Binance Alpha in May this year, soared nearly 20 times at the beginning of this month. If you hold 644 $MYX airdropped to each participating user by Binance Alpha, the highest return at the beginning of this month was even close to 13,000 U. This exaggerated data triggered a new round of FOMO sentiment in the market towards the exchange Launchpad.

Behind these data lies the core logic of the market's FOMO (Fear of Monetization) for established exchanges: the initial launch projects of high-quality exchanges often receive huge liquidity premiums and attract significant attention, and these key pieces of information will be converted into actual investment returns.

This also explains why the current market is so optimistic about Kraken Launch, the joint venture between Kraken and Legion. On the one hand, there is a long-established exchange with a 14-year operating history and a focus on compliance, and on the other hand, there is a new launch platform that claims to be "the world's first ICO underwriter." The platform jointly launched by the two has inherent advantages such as scarcity and high liquidity since its inception.

And unlike traditional launchpads, projects launched through Kraken Launch can be listed on the Kraken exchange immediately after the sales are completed. This clear expectation has greatly increased the market's expectations for the returns of this new issuance.

Judging from the timing, data from the Launchpad platforms of major exchanges is sufficient to demonstrate that the market is experiencing a high level of FOMO (Fear of Momentum) regarding this category of products, and this sentiment will naturally spill over to new platforms. Kraken Launch's launch of its first batch of new projects at this time point will most likely continue this sentiment.

However, it's important to note that as a latecomer, Kraken Launch faces significant challenges. With Binance and OKX already dominating the Launchpad market, attracting high-quality projects is challenging for new platforms. Furthermore, the Yield Basis project itself is controversial within the Curve community, with some members considering its 60 million crvUSD credit line a systemic risk. These uncertainties could impact the performance of Kraken Launch's debut.

Yield Basis: Curve Founder's New BTCFI Experiment

As the first project to be launched on Kraken Launch, Yield Basis' core value proposition is to address a persistent problem in DeFi: impermanent loss. In traditional AMMs, when prices fluctuate drastically, liquidity providers experience significantly lower returns than if they simply held the asset. This difference is known as impermanent loss.

Simply put, when you provide liquidity to a trading pool, if the token price fluctuates, your assets will automatically rebalance, and the final return is often lower than if you held the token directly. Data shows that when the price fluctuates by a factor of 5, the impermanent loss can reach 25%. This problem has plagued the development of DeFi for many years and has deterred many BTC holders from participating in liquidity mining.

Yield Basis utilizes a 2x leverage mechanism. When users deposit BTC, the protocol automatically borrows an equivalent amount of crvUSD, pairs it with BTC, and places it into the Curve pool. The generated LP tokens serve as collateral for the debt. When the BTC price rises, the protocol borrows more crvUSD to maintain 2x leverage; when the price falls, it partially repays the debt.

Yield Basis is built entirely on Curve infrastructure, using Curve's CryptoSwap AMM and crvUSD stablecoin to ensure technical stability.

However, innovation often comes with controversy. Just yesterday, Curve DAO passed Proposal 1206, approving a 60 million crvUSD line of credit for Yield Basis, sparking considerable controversy within the community. Supporters see this as a reflection of the Curve ecosystem's commitment to innovation, but opponents are also rightly concerned—this funding represents nearly 60% of the total crvUSD supply, and any issues could threaten the stability of the entire system.

More concerning, a member of the Curve forum pointed out a subtle conflict of interest: several prominent figures in the Curve ecosystem participating in the vote are also investors in Yield Basis. While Egorov responded that inviting prominent figures within the ecosystem to participate was "natural," this situation of being both a referee and a participant inevitably raises questions about the fairness of the decision-making process.

In terms of token economics, the total amount of $YB tokens is 1 billion, of which 30% is used for community incentives, 25% is used for team allocation, 15% is used as development reserves, and the remaining 30% is evenly distributed among investor sales, Curve ecosystem licenses, and partners.

On the other hand, Yield Basis's mechanism forces liquidity providers to choose between BTC-denominated transaction fees and YB token rewards. This design may work well in bull markets, as investors tend to choose tokens for their potential appreciation. However, in bear markets, if most people choose stable BTC returns over YB tokens, this could put pressure on the token's value.

Participation Guide

The Yield Basis project launch has two phases, requiring us to register on the Kraken and Legion platforms in advance and pass KYC verification.

The first is the pre-sale stage of up to 20%. During this stage, the Merit-Based allocation mechanism is adopted on the Legion platform. It is necessary to connect wallets, Twitter, Github and other platform accounts on the platform. Legion will give users a score based on the account's on-chain activities, social contributions and code contributions. Users with high scores will receive a higher allocation share in this stage.

The second phase will complete the sale of at least 80% of the remaining $YB tokens, which will be conducted simultaneously on Legion and Kraken Launch and will be open to all users who have passed KYC on a first-come, first-served basis.

It should be noted that the KYC requirements of Kraken and Legion platforms are relatively strict, and relevant identification documents and living receipts need to be prepared in advance. In addition, users in some regions (the United States, Canada, Australia, etc.) may not be able to participate in this new issuance.

Currently, Yield Basis and Kraken Launch have announced the specific launch time. However, since Kraken and Legion need 1-3 days to review KYC information, investors who are interested in this new issuance are advised to complete registration and KYC verification first.

Market Observations and Related Discussions

According to community observations, the announcement of Kraken Launch’s first new project was briefly delayed for 18 hours. The official did not give a clear reason, and as of the evening of September 24, no information or interface related to the Yield Masis launch was seen on Kraken.

On the other hand, the recent discussions about Yield Basis and Kraken Launch are highly similar, and there may be potential risks.

The current market is mainly optimistic about the Kraken Launch of $YB. Supporters, represented by José Maria Macedo, founder of Delphi Ventures, likened YB to the "BTC version of Ethena", indicating the innovation of Yield Basis in solving impermanent loss problems. At the same time, in the podcast, he emphasized the pioneering contributions of its founder Egorov in the DeFi field and the market potential of the protocol.

Podcast link: Michael Egorov: Yield Basis - Bringing Real Yield to Bitcoin

At the same time, there are also some questioning voices in the market, mainly focusing on concerns about the potential risks of Curve DAO, and believing that the credit line of 60 million crvUSD may bring systemic risks.

Conclusion

As the first project of Kraken Launch, Yield Basis carries the market's dual expectations for technological innovation and wealth effects.

However, as a new protocol still in the testing phase, investors need to be fully aware of the technical risks and market uncertainties. Driven by FOMO (Fear of Momentum), it is particularly important to maintain rational analysis and risk control.