Metronome <> Frax: Partnership and Incentives Strategy
Zane Huffman (Metronome, Vesper Finance)
Jordan Kruger (Metronome, Vesper Finance)
Deploy a new factory pool to Curve: msETH-frxETH. Integrate pool into Convex and Frax Gauges with the help of Frax team.
Match CVX voting power towards the msETH-frxETH; msUSD-FraxBP pools.
Metronome and Vesper Finance to fully support frxETH and Frax through the full product suite.
Assess success over time and potentially extend this relationship to include further incentives per user demand, and extend support to FPI and FXS.
Background and Motivation
Metronome is a multi-collateral, multi-synthetic platform that emphasizes productive collateral. Metronome is supported by the same Bloq team as sister project Vesper - a DeFi yield aggregator with several existing integrations unique to FRAX (Convex, Saddle).
Metronome intends to support productive assets, through Vesper or other yield platforms, as collateral to mint synthetic versions of popular assets. Users can swap those assets for a looping yield farming experience, trade those assets, take directional positions, and so on.
Specifically with regards to frxETH and LSD as a whole, Vesper + Metronome offers a uniquely powerful looping experience. Vesper enables a “yield-plus” experience (earn ETH staking APY plus DeFi strategy APY). Metronome offers fixed interest rates for minting synthetics, including an “msETH” synthetic. This combo enables the most capital efficient yield farming experience on LSD in the market today.
This mechanism extends towards FRAX (support already exists for FRAX on Vesper + vaFRAX on Metronome).
In return for deployment of this product suite and prioritization of Frax ecosystem assets, we seek to extend a formalized partnership around the projects, cemented through an incentives matching budget to deepen liquidity to the benefit of both communities.
Section 0: Pool Deployment
Frax team will aid Metronome to ensure that the prospective msETH-frxETH pool can be deployed properly across the full CRV/CVX/FXS gauge system, including proposal authorship and utilization of voting weight.
Section 1: Incentive Matching Budget
Frax team will match any CVX voting power towards this pool 1:1 with Metronome treasury voting through four voting cycles (~2 months) up to 165,000 CVX. Metronome treasury currently holds roughly 165,000 CVX.
These rewards may be split between msUSD-FraxBP and msETH-frxETH at the discretion of both teams, but intention will be to maintain a generalized 1:1 CVX match across that timespan.
This matching program will commence on the first voting cycle that sees msETH-frxETH properly integrated into Curve/Convex/Frax gauges.
Section 2: Frax integration throughout Metronome, Vesper
Currently, FRAX is supported on Vesper and both naked FRAX and vaFRAX are supported in Metronome.
Metronome will initially expand to support sfrxETH, enabling users to loop their position against msETH mintage (or msUSD) to multiply their APY.
Vesper will additionally expand to support yield strategies on top of frxETH. This may include:
- Curve-Convex frxETH-ETH LP
- FraxLend sfrxETH-borrow-FRAX
- Future strategies as they become available
The Vesper pool will be intended as sfrxETH APY-plus, giving users a higher APY exposure to frxETH. This pool will additionally be added to Metronome as collateral.
Section 3: Program Extension
The above agreements are intended to establish the Metronome + Vesper product suite within the Frax ecosystem for holders of both FRAX and FXS.
In particular, this system is intended to provide increased demand for frxETH and extension of supply by giving users a powerful strategy to take on a looping position for multiplied frxETH APY.
Should there be significant market demand for these products, this proposal may be extended after the 4-cycle agreement with a follow up proposal to continue CVX matching and/or introduce a bribe matching program.
In addition to FRAX and frxETH, Vesper can extend deployment to FXS and FPI pools, with the same intent purpose of inclusion in Metronome.
In the event of any multi-chain ambitions in the future, Vesper + Metronome can also be incorporated on those chains.
Lastly, both teams can discuss privileged opportunities for Frax assets, like a separate synthetics pool with better rates. This would require future governance activity through Metronome DAO.
Prioritize frxETH and FRAX throughout the Vesper + Metronome ecosystem, giving the users the opportunity to deposit and passively earn yield through Vesper and simultaneously post that productive position as collateral to Metronome.
Frax to match CVX voting weight with Metronome, up-to Metronome’s 165,000 CVX stake, for four voting cycles.
Frax ecosystem participants benefit in a number of ways:
- New yield farming opportunities on frxETH + FRAX
- Increased demand and potential supply expansion on frxETH, driving greater revenue back to Frax and veFXS holders.
- Ability to take on directional, exotic positions on Frax ecosystem assets using a combination of Frax Finance collateral against misc. synthetic positions.
- Routing of Frax assets throughout the broader DeFi ecosystem, driving relevant metrics like liquidity, borrow activity, trading volume, and so on
For: Authorize a CVX voting match of up-to 165,000 CVX for four voting cycles.
Against: Do nothing.