Diving into Curve V2: Beyond Stablecoins for Higher Yields?

Been spending a lot of time on Curve lately, mostly sticking to the usual stablecoin pools like 3CRV and FRAXBP. The yields are predictable, but honestly, they've been a bit stagnant. I'm curious if anyone here has been experimenting more deeply with Curve's V2 pools, specifically the ones that aren't just for stables?

I've been looking at some of the more volatile asset pools, like those involving wrapped BTC variants or even some of the ETH/stETH type pools. The idea is to potentially capture higher trading fees and maybe benefit from better impermanent loss (IL) mitigation strategies that Curve V2 supposedly employs. The whitepaper talked about how V2 pools can dynamically adjust their AMM curve and leverage to optimize for IL and fee generation, which sounds promising compared to the static curves of V1.

My main concern is obviously the increased risk. With volatile assets, the potential for larger drawdowns and higher IL is real. I'm trying to wrap my head around how the V2 smart contracts actually manage this. Are there specific risk parameters I should be watching closely?

Has anyone had success (or notable failures!) in these non-stablecoin V2 pools? What kind of yields are you seeing, and how are you managing the risk? Any tips on selecting the right V2 pools or understanding their specific mechanisms would be greatly appreciated. I'm thinking about starting with a small allocation to a BTC pool to test the waters.

Share your experiences!

From my experience, diving into Curve V2's volatile asset pools can definitely unlock higher yields, but it comes with a steeper risk profile. I've played around with some of the ETH/stETH pools, and the impermanent loss (IL) can catch you off guard if there's significant price divergence between the assets.

One thing to consider is the type of volatility. For assets that tend to move somewhat in tandem, like different wrapped BTC versions, the IL might be more manageable. However, if you're looking at pools with more uncorrelated assets, the risk of significant IL increases.

Are you focusing on specific asset pairs within V2, or just exploring generally? Understanding the underlying correlation between assets in a pool is key to managing risk and maximizing those potentially higher yields.

That's a solid point about the impermanent loss in V2 volatile pools. I've seen that firsthand with some ETH/stETH plays myself. The key is definitely understanding the asset correlation.

For me, I've found some interesting opportunities in pools where there's a perceived "yield" difference between two similar assets, like different wrapped versions of the same underlying. For instance, if one wrapped BTC has a slightly higher yield from an external protocol and is paired with another on Curve, you can sometimes capture that delta more efficiently than just holding.

Have you looked into the CRV emissions for these volatile pools? Sometimes the added APY from CRV incentives can offset some of the IL risk, at least in the short to medium term. Curious if that's a factor in your calculations.

That's a great question about exploring beyond stablecoins on Curve V2! I've been watching those volatile pools with interest too. The potential for higher yields is definitely appealing, but as others have mentioned, the impermanent loss is a real concern.

One thing I've noticed is that the smart contract risk also seems to scale with complexity in these V2 pools. While the underlying assets themselves might be liquid, the way they're managed within the V2 architecture could introduce new vectors for issues. Have you done any deep dives into the specific V2 pool designs or audits for the volatile asset pairs you're considering?