osETH Liquidity: osETH-rETH on Curve

7 min readDec 6, 2023


The osETH-rETH pool on Curve is an important pool to help provide quality trading between two key liquid staking tokens. This pool provides a great way for holders of both osETH and rETH to boost their staking rewards in the form of SWISE tokens, and soon also CRV and CVX.

For those who are unfamiliar with the Curve Decentralized Exchange, check out the Curve Explained section below to give you a solid foundation of the DEX’s pricing and incentivization mechanisms. For those who want to jump straight in, follow the step-by-step guide below.

!Note! Incentives for this pool have been switched to a mix of CRV and CVX, accrued through Convex Finance. Liquidity providers will need to stake their LP tokens on Convex to receive the rewards. If you have previously staked LP tokens on Curve, unstake them from Curve and skip to Step 3 in the instructions below.

Step-by-step guide to deploying liquidity on Curve

  1. Navigate to the osETH-rETH pool page and select “Deposit” under the “Deposit” tab on the left-hand-side.
  2. Enter the amount of assets you wish to deploy as liquidity. Note, Curve allows you to deposit liquidity in any ratio, however, it is recommended to deposit rETH/osETH in the same ratio as the assets in the pool. At this time, it is roughly 1.09:1 between osETH and rETH balances. This ratio will ensure your liquidity matches the current secondary market price for both rETH and osETH, and to avoid price impact and capital loss (see the Curve Explained section for more information).
  3. Head to the Convex Finance dApp to stake your LP tokens. In the “Stake Curve LP Tokens” section, wait for ca 30 sec for all options to fully load, then press the “To Deposit” tab and select the osETH+rETH pool from the options.
  4. Enter the amount of LP tokens you wish to stake (we suggest entering MAX) and approve then confirm the deposit. You will start receiving CRV and CVX rewards for your LP position as soon as the last transaction is confirmed.

Note that liquidity rewards can be claimed via the Claim page on Convex.

Find a visual guide to adding liquidity here: https://x.com/stakewise_io/status/1732412099748602195?s=20

Curve Explained

Curve is a decentralized exchange that has been live since January 2020 and is the market leader in terms of volume and TVL for stable trading pairs. Just like UniSwap, Curve allows users to deploy liquidity in a permissionless fashion and for traders to trade assets via its automated market maker (AMM).

Incentives mechanism

Mechanically, receiving CRV and other tokens requires liquidity providers to lock their LP tokens. Note that at this time, LPs in the osETH-rETH pool are receiving CRV and CVX incentives as long as they have staked their LP tokens on Convex Finance.

Curve pioneered the veTokenomics model for its native token, CRV. This means that it rewards LPs with the CRV token as an incentive for providing liquidity in Curve pools. The CRV token has a fixed emissions schedule that extends for over 100 years, where every week a set amount of tokens are issued to liquidity providers in the participating liquidity pools. The full emission schedule can be found in the Curve docs, here.

As an incentive to hold on to the farmed tokens, Curve also offers liquidity providers to “lock” their CRV, i.e. stake them in a special contract for long, defined periods of time, in order to “boost” the CRV APY of their LP position by up to 2.5x. However, since the amounts and lengths of time required for receiving this boost are unattainable for most users, Convex Finance emerged to help them achieve the boost.

Convex is a protocol built on top of Curve veTokenomics and has been live since May 2021. The protocol is designed to obtain control of as much veCRV (locked CRV) as possible in order for Convex Finance’s native token, CVX, to have majority control over CRV emissions. As a result, Convex has emerged as a platform where you can obtain the 2.5x boost to CRV APY by staking your LP tokens into Convex, not Curve. In addition to this, you become eligible to receive CVX emissions, significantly boosting your overall APY from providing liquidity on Curve.

It is important to stress here that liquidity providers do take on extra smart contract risk when interacting with Convex and LPs must be comfortable with this risk in order to access the extra rewards. However, Convex has a track record of operating without vulnerabilities, and currently has in excess of $1BN in Total Value Locked on its platform.

For more information on the Curve incentives mechanism, visit the Curve docs. More information about Convex can be found here.

Pricing Formula

Curve introduced stable math to the world of AMMs, increasing the trading efficiency of ‘stable’ asset pairs compared to the x*y=k pricing curve first invented by Uniswap. This makes Curve best suited for assets that consistently trade at a similar price, just like the osETH-rETH pairing.

The graph below showcases the difference between the stable math pricing curve (Curve’s Stableswap invariant) vs Uniswap’s x*y=k, with the right-hand graph showcasing how this pricing model leads to lower slippage for stable pairs around their ‘fair value’.

Comparison of Curve with Uniswap for a liquidity pool consisting of coins X and Y which have the “ideal” price of 1.0.

(Right) Price slippage: Uniswap (dashed line) vs Curve (solid line)

(ref: Curve Stableswap whitepaper)

If you fancy a deep dive into stable math, then the Curve Stableswap whitepaper is for you. Alternatively, the Curve docs are a good place to learn more about Curve Liquidity Pools in general.

The osETH-rETH is a new generation stableswap pool, where the native token price of both osETH and rETH are obtained from StakeWise and Rocket Pool directly to help adjust the pricing curve as the price of these tokens change. This means that even when the osETH/rETH price is far from 1, the liquidity pool will continue to trade efficiently.

Curve also allows single-sided deposits, however, single-sided liquidity deployment behaves very differently from that of Uniswap V3. Because all Curve pools are full-range liquidity, the AMM automatically swaps your single-sided deposit behind the scenes to adjust your token ratio to match the pool. This means that by providing single-sided liquidity, you are simultaneously committing to sell a percentage of your tokens into the other asset alongside deploying liquidity. In short, deploy single-sided liquidity with care, and if you are not sure, always deploy tokens in the ratio suggested by the Curve UI.

What to think about as an LP (Risks / Rewards)

As liquidity is only deployed full-range on Curve, there are no extra considerations other than whether you are happy taking price exposure to both rETH and osETH, alongside the associated smart contract risks of StakeWise, Rocket Pool, Curve, and Convex. Assets in this pool are ‘100% long’ ETH, meaning as ETH increases in value with respect to USD, so too does your liquidity position (and vice versa).

rETH and osETH are a ‘stable asset pair’ where both tokens should reprice higher with little volatility (in theory). In practice, some volatility should be expected and cause a shift in the ratio of tokens within your LP position. For example, should osETH decrease with respect to rETH by 10%, LPs effectively sell rETH to buy osETH as the price decreases. This effect will be directly offset should osETH return to its true price and your asset ratio return to the fair market rate.

It is also important to consider that osETH redemptions are currently switched off and are planned to go live in early 2024. The main implication from this is that osETH may experience a period of trading at a discount compared to its real price until redemptions are enabled. We advise LPs to take this into consideration before providing liquidity. Similarly, Rocket Pool’s rETH redemptions rely on the sufficient amount of unbonded ETH in the Rocket Pool protocol. Should this reserve be depleted, redemptions of the rETH token for ETH from Rocket Pool will not be possible.

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