Metronome has an automated process that allows users to multiply deposits into productive collateral, providing access to increased yield opportunities. This process can be accomplished manually, but by employing Metronome’s looping architecture, users can accomplish the same result in a simplified, gas-sensitive process all through the Metronome dApp.
By depositing productive yield-bearing assets, users can generate synthetic assets that represent the same underlying assets as their collateral. This synthetic can then be swapped for the original underlying asset, and then swapped into the yield bearing productive instrument. This token is then deposited into Metronome as collateral, allowing the user to mint the matching synthetic asset. This process can then be repeated multiple times.
- 1.User deposits USDC into Vesper Finance USDC pool and receives vaUSDC tokens (yield bearing token).
- 2.vaUSDC is deposited as collateral into Metronome, and msUSD is minted.
- 3.msUSD is swapped on a DEX for USDC.
- 4.USDC is then deposited into Vesper Finance USDC pool which receives vaUSDC.
Disclaimer: Looping deposits for yield increases the risk of liquidation. The more looping that is deployed, the higher the risk of liquidation.