Can you passively LP in the Curve ETH/stETH pool?

I’m looking for a place to park my ETH where I can forget about it and earn some yield. Everything I’ve ever read about IL says that some huge percentage of LPs lose money because the IL is greater than the yield for most tokens. stETH is pegged to ETH, though, so maybe it’s not as bad? Can I just throw my ETH into the Curve pool then check it in six months, and find out I have more ETH and not less?

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9 thoughts on “Can you passively LP in the Curve ETH/stETH pool?”

  1. You’re right about LP. **If the price stays pegged, you don’t lose anything** and just earn the trading fees (which will be less for a stable swap since prices don’t move as much).

    **BUT** when you add you have to add both stETH and ETH in equal proportions which means you only get staking rewards from half your position. You should compare that against holding everything as stETH. So the stable swap pool has to earn you more than the stETH staking reward (~4.5% in normal times) to make up for missing one stETH’s worth of rewards. And historically stable swaps never give you more than 3% on average. So you’re better off just holding everything as stETH.

    There’s also the added effect of LPing on rebasing tokens like stETH, where the amount grows over time. That’s a totally separate mechanic that interacts with LP pools in a way that makes the position earn less than the actual interest rate. For example, instead of earning 4.5% from rebasing, you might earn something like 4%. I can explain that if you want, but the **tl;dr is I’ve never found LPing stETH/ETH worth it, just holding stETH is better.**

  2. The biggest risks are issues with the liquid staked token, so as long as you’re OK with holding stETH you can passively LP ETH/stETH

  3. Im curious, i want to use stETH as collateral and then borrow stable coins.
    I can’t find any protocol that allows that, something like liquity but instead of use ETH it can be any well known LSD. If anyone know any protocol pls lmk!

  4. For 5-6% APR I’d rather just stake single sided. However you can LP rEth/Eth or sfxsEth/rEth/wstEth for around 12% APR and I do find the R/R worth it.

  5. stETH is not pegged to eth. It is a staking derivative that is redeemable for ETH when eth withdraws are made available at somepoint in the next… oh … 5 ??? years. The value of stETH has absolutely no obligation or mechanics which cause it to be ‘pegged’ to eth.


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