Key Takeaways
- Michael Egorov, the founder of decentralized exchange Curve Finance, is on a mission to eliminate impermanent loss and is using Bitcoin to do it.
- While Yield Basis wasn’t originally conceived for BTC, Egorov says its market demand and fit for the mechanism made it the “obvious first choice.”
- Egorov said he does not see anything “particularly special” about Layer 2 development in 2025.
Michael Egorov isn’t swept up in the hype around 2025’s Layer-2 boom.
The founder of famed decentralized exchange Curve Finance says scaling solutions have been progressing for years and will continue to do so, but this year has not been “anything particularly special.”
Instead, Egorov’s attention is on bringing organic yield to Bitcoin (BTC) while tackling one of DeFi’s most stubborn problems, impermanent loss.
Curve Finance itself was launched in 2020 and quickly became the go-to destination for stablecoin trading, but impermanent loss remains a barrier to extending that success to more volatile pairs.
Egorov believes Bitcoin offers the ideal proving ground for his solution.
Michael Egorov Is Targeting DeFi’s Last Big Hurdle
Egorov told CCN that impermanent loss is the primary reason volatile asset liquidity remains centralized.
“That’s the main reason why liquidity for volatile trading pairs remains concentrated on centralized exchanges,” he said.
In his view, stablecoin pools have already found a natural home on decentralized exchanges, a shift Curve helped pioneer in 2020, but the same hasn’t happened for volatile pairs.
He stressed that Yield Basis is “designed specifically to address IL,” which he calls “the last major barrier to true on-chain liquidity provision.”
Asked why impermanent loss remains unsolved, Egorov was blunt: “People haven’t figured out the science behind AMMs sufficiently enough to tackle the IL issue.”
He pointed out that previous approaches, from Bancor’s inflationary model to complex options structures, either failed economically or struggled to scale.
Even perpetual futures hedging, he noted, is “extremely hard to execute profitably” and requires constant position management.
Egorov’s solution to the problem is Yield Basis, with the goal of making it viable for liquidity providers to support BTC pairs on decentralized exchanges without risking losses due to price divergence.
If successful, Egorov believes the same mechanism could later be applied to other assets, from Ethereum to tokenized real-world assets like gold.
Nothing ‘Special’ About L2s In 2025
While much of the crypto world has been buzzing about the pace of L2 innovation this year, Egorov isn’t convinced there’s anything unprecedented happening.
The Curve Finance founder pointed out that scaling solutions have been evolving steadily for years, and that 2025 is no sudden inflection point.
“L2 development has been underway for years now and they will keep advancing — I don’t see anything particularly special about 2025 in that regard,” he said.
For Egorov, the current wave of optimism feels more like a continuation of existing progress than a fresh breakthrough.
Beginning With Bitcoin
Egorov explained that the original concept for Yield Basis “actually had nothing to do with Bitcoin at all,” but the asset quickly emerged as the most suitable vehicle.
“Bitcoin turned out to be the optimal asset to make the mechanism work effectively,” he said, noting that demand for Bitcoin yield far outstrips current supply.
“That combination solidified BTC as the obvious first choice of asset,” he added.
Looking ahead, Egorov sees Bitcoin cementing its role as digital gold rather than everyday currency.
“I have a hard time picturing it being widely used for casual everyday payments like buying coffee,” he said.
However, Eregov said Ethereum in contrast could underpin much of the global financial system, but “probably won’t happen through the kind of ‘mass adoption’ people imagine.”
Instead, he likens it to Linux, powering critical infrastructure without most people realizing it.
“In much the same way, we can expect Ethereum — and blockchain technology in general — to one day run under the hood of the majority of global financial infrastructure,” he said.
Balancing Innovation With Decentralization
For Egorov, full decentralization is the strongest defense against regulatory risk and pressure.
“If you truly don’t control the platform, then by definition, neither can anyone else,” he said.
This model, however, requires extreme diligence from the outset.
“When you can’t even upgrade the smart contracts because they are immutable by design, you have to be extremely diligent upfront,” he said.
“Because you don’t have the luxury of patching up security holes later.”
Lessons From Curve
From a builder’s perspective, Michael Egorov says one of his biggest technical takeaways from running Curve Finance is to treat external integrations with caution.
“One should never underestimate the risks that come from dependencies,” he explained.
“If you integrate with something external — outside of your control — your combined risk surface grows.”
While he still believes composability is one of DeFi’s greatest strengths, he warns it comes “with its own share of drawbacks.”
On the community side, Egorov has found that fast, informal support can be one of the most effective growth tools.
“Good community management and fast technical support make for very effective marketing,” he said, adding that responsiveness helps spread the word about a product far more organically than paid campaigns.
Kurt Robson is a London-based reporter at CCN, specialising in the fast-moving worlds of crypto and emerging technology. He began his career covering local news in Cornwall after graduating from Falmouth University with First Class Honours in Journalism. There, he cut his teeth on everything from council meetings to missing swans.
He quickly rose through the ranks to become a frontline journalist at several of the UK’s leading national newspapers. Over the years, he has interviewed musicians and celebrities, reported from courtrooms and crime scenes, and secured multiple front-page exclusives.
Following the upheaval of the COVID-19 pandemic, Kurt shifted his focus to technology journalism—just ahead of the AI boom. With a natural curiosity and a trained eye for emerging trends, he has found a new rhythm in reporting on innovation.
At CCN, Kurt's work focuses on the cutting edge of crypto, blockchain, AI, and the evolving digital world. Drawing on his background in people-first reporting and his deep interest in disruptive tech, Kurt delivers stories that are insightful, entertaining, and human-centric.
