Yield Basis discloses fee-extraction route in WETH upgrade
On October 28, 2026, Yield Basis disclosed a deposit-and-withdraw route that allows traders to extract pool value without paying proper fees, alongside announcing a permissionless propAMM overhaul for its $WETH market on Curve.
The disclosure comes as Yield Basis announced its permissionless propAMM proposal, a proposed overhaul of pricing for the protocol's $WETH market on Curve. The team stated that the update closes the identified route and that technical details will follow after all pools receive the fix. Yield Basis proposal 60 was still marked active when checked, with voting scheduled to end on October 29.
Fee Protection Mechanism
The Curve governance proposal describes the protection more narrowly than the announcement does. New liquidity-token deposits must add debt proportional to their minted LP collateral within 1 basis point. The proposal identifies this constraint as protection against value extraction through a deposit followed by a withdrawal.
The same proposal would attach the YBOraclizedPolicy contract to the existing $WETH/$crvUSD Curve pool, leaving the underlying Curve pool contract unchanged. Yield Basis says its DAO owns the policy, while the Curve emergency DAO can switch it off.
New Pricing Design
The proposed policy uses an external price from Pyth Pro to determine both swap fees and where the pool concentrates liquidity. Pyth Pro publishes signed $ETH/USD reports once a second. The policy checks the signature and requires it to be newer than the stored report, accepting reports only within 12 seconds of observation.
Arbitrageurs can bundle a report with their swap because a fresh reference price can reduce their fee.
Corrective swaps receive a discount starting at 0.50%. When the trader's edge exceeds that threshold, the pool charges the base fee plus 67.5% of the excess, subject to a 1.75% ceiling. Other trades pay 1.75%. The discount fades as the report ages and disappears after 5 minutes.
Performance Considerations
Yield Basis reports that a simulated $WETH position earned 8.5% annually in $ETH under the proposed design, compared with 3.6% under existing settings. The test covers 18 months using historical Pyth prices and Binance trades.
However, during an August 2026 rally where $ETH rose 30% in a few days, the proposed design's price_scale fell as much as 12.4% behind the market and remained at least 5% behind for about 11 days. The current settings' maximum lag was 6.3%.
The team tested 49 parameter combinations and reports that 44 settings completed the same 18-month simulation with annual returns between 7.4% and 9.9%. The planned sequence starts with $WETH, followed by separate votes for $cbBTC, $WBTC and $tBTC pools after the first policy deployment.
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