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Yield farming: why doing it with anything other than stablecoin? Help me understand

I have been in the Defi space for only a few weeks and tried to read as much as I can. However I can’t find an economic reason why I should provide liquidity to anything that is not a stablecoin pair. My case – imagine you enter a pair with any two coins, *NOT* stablecoins:

* **Bullish** scenario: one of the two tokens goes up. Enter impermanent loss. yes, you make some money from the fees, but you will likely receive them in the “losing” token. Also, if you had hedl, you’d had make more money
* **Bearish** scenario: like above but in reverse

If nothing happens, you have made a yield out of the tx fees. But why take the volatility risk and just yield farm in USDc/DAI for example?

The only reason I can see for joining a volatile pair is due to the rewards that some exhanges drop on top of the tx fees (like QuickSwap, etc). Or to “support the project” but it’s hardly an economic reason without proper incentives.

Am I missing something out?

What do you think?

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2 Comments

  1. >The only reason I can see for joining a volatile pair is due to the rewards

    I can’t just want to sell? Or basically to keep a weighted portfolio?

    You’re right that if you’re worried about IL then your optimum tokens would oscillate in value around each other but return to a norm. So stablepairs like usdc/dai, wbtc/renbtc/pbtc, etc. If you happen to find a different pair that oscillate then there’s potential profit there.

    My ancient Mkr/Eth uniswap v1 pool has netted more in fees than the initial principal. MKR and ETH can IL between each other for eternity for all I care, just gives me more fees. If someone genuinely wants a 75/25 wbtc/weth portfolio then they can go somewhere like Balancer and make that. Everyone is in a different position, if you’re looking to hodl there’s also zero wrong with that, maybe look for where you can gain interest. Although, I got a relative that doesn’t even like their stuff leaving their wallet, fair enough.

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