The Metronome DAO Treasury has been allocated 8,203,669 MET tokens and 8,346 Ethereum which originated from the Metronome 1.0 Autonomous Converter Contract (ACC). These funds are controlled by a multi signature wallet.

Treasury funds will be used for further development of the Metronome ecosystem, to develop new products, and for collaborating with other leading DeFi projects.

Treasury funds will also be used to provide protocol-owned liquidity on major DEXes. 2,000,000 MET, 1000 ETH & 250,000 USDC have been provided as LP on Uniswap v3.

MET tokens held by the DAO Treasury will not participate in DAO governance/voting.

An additional multi signature wallet funded with MET will act as a satellite wallet at the discretion of the team for ongoing operational expenditures.

The Metronome community will be able to propose and vote upon treasury spending in the future.

DAO Treasury proposals and votes can be viewed on the Metronome Governance Snapshot web site.

Metronomes Synth Liquidity Pairs

Metronome msAssets have active liquidity located in the following locations:

Discount on Peg

When a msAsset devolves from the 1:1 peg with its underlying asset the incentive for users to repay minted synthetics increases linearly. Removal of LP during this time has a negative effect on peg maintenance and results in a capital loss for the user.

The Metronome Treasury provides protocol owned liquidity for the Metronome token ($MET), msETH and msUSD.

• Metronome Token Liquidity

The Metronome Treasury is providing protocol owned liquidity for the Metronome token on leading DEXes. 2,000,000 MET, 1000 ETH & 250,000 USDC have been provided as LP on Uniswap v3.

• Metronome Synthetic Liquidity

The Metronome Treasury will provide protocol owned liquidity for msUSD and msETH on the dApp. Liquidity depth is an integral component for the platform to function at its full potential, acting as a backstop regardless of market activity.

Treasury funds may also be used with external liquidity providers through strategic LP incentivization agreements. From beta, this will include incentives for Curve Liquidity Providers through Curve natively and Convex. Over time, Metronome Growth Work Stream focuses will include partnership agreements that may include third party incentives.

Protocol owned liquidity behaves similarly to external provided liquidity.

The Treasury may take on efficient and concentrated positions utilizing DEXes, such as Uniswap v3 and Curve. The treasury may also pair synthetics against different pairs. An example of this would be pairing msETH against rETH (or another productive asset).

The Metronome Treasury protocol owned liquidity may grow over time as platform adoption and revenues increase.

Overview

Metronome Synth is a new multi-collateral/multi-synthetic protocol that enables users to post their existing crypto holdings as collateral to create synthetic versions of other popular assets.

This collateral can include productive assets (yield bearing assets, such as Vesper Finance vPool tokens) or naked assets like ETH and USDC. Depositing collateral allows users to mint synthetic assets, which can then be swapped without slippage on the Metronome Synth Marketplace, or used for looped yield farming. These assets can also be used more generally for lending, farming, trading, or whatever else users desire.

The Metronome Synth protocol is powered by the MET token, which serves as both a utility token on the dApp, and as a governance token for the Metronome DAO.

Metronome Synth is currently deployed on Ethereum, Optimism, and Base. Additional chains are in development.

Metronome is a decentralized finance (DeFi) multi-collateral/multi-synthetic protocol. Through the Metronome dApp, users are able to deposit crypto assets as collateral, and use that collateral to mint popular crypto synthetics. These synthetics allow users to perform slippage free trades (swaps) and engage in yield farming.

Metronome’s native token ($MET, also referred to as MET) is an ERC-20 utility token. There are two primary use cases for the MET token.

• Governance: $MET can be locked in return for esMET, which is the governance token for the Metronome DAO. This will enable users to participate in governance proposals and voting.

• Trading Fee Discounts: Users will be able to ‘stake’ their $MET by depositing their token into a smart contract with a set duration of time for the lockup. Using a tiered system based on the number of esMET held, and the duration of lockup chosen, users will receive a discount on all synthetic trading fees. Full details coming soon.

Future and additional use cases for the MET 2.0 token are being explored. This document will be continually updated with the latest information.

The Metronome Dashboard is the gateway to the Metronome Synth ecosystem. Through the dashboard, users can deposit collateral and mint their initial synthetic assets, as well as manage their existing collateral positions.

Values

Fundamental values of web3 are embedded in the Metronome Synth Protocol:

• Permissionless: No signup or account verification process is required to enter the Metronome Ecosystem.

• Trustless: Activity is executed via Metronome smart contracts with no third parties involved during the process.

• Non-custodial: Users retain custody control of any collateral deposited, along with their synthetic counterparts, but subject to collateral liquidation rules. Funds can be withdrawn at any time (so long as a user’s outstanding position supports it).

Features

The current features of the protocol offered by Metronome Synth:

• Productive Collateral: Users of Metronome Synth have the ability to post productive collateral, including Vesper pool share tokens, to increase capital efficiency. This gives users the opportunity to earn yield on their collateral while utilizing the products that Metronome Synth offers.

• Yield Farming: Metronome can automate the process for users to loop their deposits into additional productive collateral, which could increase APY.

• Zero Slippage Swaps: Metronome Synthetic Assets can be traded/swapped with zero slippage, but are subject to trading fees as described elsewhere.

• Simplistic UI: Metronome Synth's user interface was designed in a simplistic and elegant fashion for ease of use and a pleasant user experience.

• LayerZero Integration: Our synthetic assets are LayerZero OFTs. Trade them directly on AMMs and transfer cross-chain via the Stargate frontend. Enjoy synchronized cross-chain liquidity for greater access to Smart Farming yields.

The Synth Marketplace is where users can swap synthetic assets inside the Metronome Synth dApp.

To swap synthetic assets on the marketplace, users must first deposit collateral and mint a synthetic asset through the Metronome Dashboard. Alternatively, users may be able to acquire synthetic assets on the open market (i.e. DEXes) before swapping on the Metronome marketplace.

Swaps on the Synth Marketplace have zero slippage and a low trading fee of 0.25%

Swaps can be utilized to effectively create long or short positions.

• Long example: Deposit USDC for msUSD > Swap to msETH. (User is effectively long on ETH)

• Short example: Deposit USDC for msETH > Swap to msUSD. (User is effectively short on ETH)

Liquidity for MET Synth is limited by a mintage cap on each individual synthetic asset, which is a global cap shared by all users on the platform. This maintains the health of the overall ecosystem by preventing excessive concentration in any one synthetic or posted collateral. Collateral assets additionally adhere to a global cap shared by all depositors for the same purpose of system health.

Individuals have their own personal liquidity limits based on their collateral factor.

Synths can be exchanged for other synths at their current market price, assuming they do not exceed the global synth mintage limitation. Mintage caps and other parameters are designed to prevent potentially unfavorable conditions for the synthetic assets, such as a situation where too many traders swap one synth for another, and thus disconnecting synth collateral from outstanding mintage.

Synthetic positions are overcollateralized, which means that users have to have more collateral deposited than the amount of synthetics they have generated.

Collateral assets have varying collateral factors, which determines the maximum amount of synthetics that can be generated from a deposit. If/when the value of the synthetic assets falls in value below the required collateral ratio, a partial or full liquidation can occur.

Asset Collateral Ratios

Stablecoins

• USDC: 85%

• DAI: 85%

• FRAX: 83%

• vaUSDC: 82%

• vaFRAX: 80%

ETH

• ETH: 83%

• vaETH: 80%

• sfrxETH: 80%

• vastETH: 78%

• varETH: 75%

• vacbETH: 67%

Others

• WBTC: 80%

Risk Methodology

Metronome Synth use a risk scoring framework to assess to apply Collateral Ratios to assets.

The different risk scores are intended to provide a holistic risk assessment that covers relevant asset metrics - smart contract complexity, volatility, liquidity and so on. This is a similar methodology to Aave, Compound, Euler and others.

Benchmarks for each score are differentiated between USD-like assets, ETH-like assets, and all others.

Each category of asset adheres to a maximum and minimum Collateral Ratio, and an assets individual risk score determines where its Collateral Ratio falls within the category.

Collateral Ratio Framework

There are five variables scored when assessing each asset. These variables are as follows:

Issuance/Market Cap: The total size of an asset. This can be expressed as an absolute $ amount or a relative market cap ranking.

Open Market Liquidity: The aggregate $ amount of AMM liquidity for an asset.

Lindy Score: The duration of time an asset has been live in production.

Peg Volatility: How much, on average, an asset deviates from its underlying peg (if applicable).

Rehypothecation: The number of times an asset is wrapped or redeployed across smart contracts.

Assets can score from 0-3 on each of these variables, with a higher score corresponding to a higher risk.

The scores are applied to each asset type as follows

Stablecoins

ETH

Other cryptoassets

The Risk Score translates to a Collateral Ratio as follows

Note: Metronome Synth is in Beta. This system and these rates may change as Synth mature into production launch.

A key feature for Metronome Synth is the ability to deposit yield bearing assets as collateral to mint synthetic assets. Users can then enjoy greater capital efficiency as their collateral is then productive.

Currently, Metronome Synth accepts select pool tokens from Vesper Finance.

Example:

• User deposits USDC into the Vesper Finance USDC pool and receives the vaUSDC token.

• vaUSDC is a yield bearing token, so over time the user earns additional USDC on their deposit.

• User then takes the vaUSDC tokens and deposits them as collateral on Metronome Synth.

• This collateral can now be used to mint synthetic assets.

• Their USDC continues earning yield in the Vesper pool while it simultaneously acts as collateral.

Certain MET Synths can be obtained on the open market, using Curve Finance or other DEXes, such as Aerodrome on Base or Velodrome on Optimism.

These synths can immediately be swapped on the MET Synth Marketplace for other synths.

In time, these Curve LP tokens for example may have additional yield-bearing opportunities, such as a pool on Vesper Finance, or as a collateral asset on other DeFi platforms.

The primary risk to users on Metronome Synth is the risk of liquidation.

Liquidation is when a user’s position is partially or entirely closed, automatically based on rules programmed into the Metronome dApp.

Liquidation occurs when the value of a user’s collateral times the collateral factor of collateral asset(s) drops below the value of a user’s outstanding synthetic mintage.

Users can avoid liquidation by improving the health factor of their loan, which involves either depositing more collateral and/or redeeming some of the outstanding deposited collateral.

Health factors can be viewed at all times on the Metronome Synth dashboard for users to view and manage their risk. The health factor is determined by the amount of collateral vs. the value of a user’s synthetic assets.

Valuation of synthetic assets is determined via Chainlink’s oracle. Chainlink is the leading oracle provider in Web3. Chainlink oracle price updates happen at regular intervals. In addition, if an asset price deviates beyond a set threshold between oracle updates, the Chainlink oracle will update immediately to reflect the new price. See more about chainlink oracles on their site.

Users are unable to mint synthetics when they are in excess of their collateral factor, but they retain privileges to deposit more collateral or redeem outstanding collateral positions in order to improve the health of their position.

DeFi poses unique risks in comparison to centralized applications. A number of primary risks have been outlined here. Additional unforeseen risks may not be listed in this documentation.

Primary risks:

• Liquidation

• Black Swan Events

• Oracle Disruption

• Smart Contract Hacks

A secondary risk faced by Metronome users is a 'black swan' event, where either a synth’s underlying asset or a collateral asset sees a rapid change in price. In extreme cases, the user will not be able to modify their position fast enough to avoid liquidation. This is a broader risk that affects DeFi lending and synthetic protocols as a whole.

Metronome Synth utilizes Chainlink as its blockchain oracle to monitor the underlying asset prices for synthetics and collaterals that are usable on the platform. Chainlink is widely regarded as the leader of oracles in DeFi.

Oracle disruption can occur, which has the potential to cause a number of potential problems for users such as the following:

• Transactions failing on-chain when trying to mint or close a synthetic position

• Asset pairs could fall out of peg at a 1:1 ratio

• Potential liquidation of a user’s assets due to incorrect price information

Metronome additionally employs internal oracle parameters to minimize such disruptions. However, as is the case of any DeFi application using oracles, these risks cannot entirely be mitigated.

Synth Mintage Caps

The mintage cap for each synth is calculated by combining the maximum mintage of all like-asset collaterals associated with the synthetic asset in question. However, it is important to note that the actual cap may be lower during the initial ramp up phase and is subject to the discretion of the Metronome maintainers. The actual cap will be influenced by open market liquidity.

The formula for determining msUSD mintage cap for example would be as follows:

Max msUSD = (USDC deposit cap * CF) + (FRAX deposit cap * CF) + (DAI deposit cap * CF) + (vaUSDC deposit cap * CF) + (vaFRAX deposit cap * CF)

Deposit Caps

Deposit caps restrict the amount of any one collateral that can be deposited on the Metronome Synth application. These numbers are expected to increase over time.

Metronome Synth has multiple revenue streams including fees and liquidations. All revenue goes to the Metronome Treasury, which will be used for continued ecosystem growth and health.

Synth Balance Fee - The balance fee is a mechanism to address the risk associated with generating synthetic assets on the Synth protocol. Each synthetic asset will have its own specific balance fee based on its risk profile. This fee is an annualized fee, charged on a per-second basis, and is applied by increasing the outstanding synthetic position the user holds. This fee can be viewed on the Metronome Dashboard, by hovering your mouse over each individual synthetic asset.

Marketplace Trading Fee - The marketplace fee is charged to users when swapping synths on the Synth Marketplace. The fee for swaps is 0.25%

Liquidation Fee - User positions are assessed with a premium fee whenever liquidation occurs. This fee is split between the liquidator and the Synth Protocol. Currently, the liquidation fee is an additional 18%, of which 10% goes to liquidator and 8% to Metronome.

DAO - A decentralized autonomous organization (DAO) is an emerging form of legal structure that has no central governing body and whose members share a common goal to act in the best interest of the entity. Popularized through cryptocurrency enthusiasts and blockchain technology, DAOs are used to make decisions in a bottom-up management approach. https://www.investopedia.com/tech/what-dao/

Synthetic Asset - Synthetic assets are simulated representations of real-world assets on the blockchain. A synthetic asset is like a crypto instrument that tracks the price performance of an external asset without being backed by the actual asset.

Multi-Synthetic - Through Metronome Synth, users are able to mint multiple synthetic assets across various blockchains and ecosystems. With this Multi-Synthetic approach, users are not limited to the assets on a single chain.

Collateral - Collateral refers to assets deposited in order to mint synthetic assets

Multi-Collateral - Metronome Synth is multi-collateral, which means that there are multiple different assets, across multiple chains, that can be deposited as collateral.

Oracle: Oracles provide a way for the decentralized Web3 ecosystem to access existing data sources, legacy systems, and advanced computations. Decentralized oracle networks (DONs) enable the creation of hybrid smart contracts, where on-chain code and off-chain infrastructure are combined to support advanced decentralized applications (dApps) that react to real-world events and interoperate with traditional systems. https://chain.link/education/blockchain-oracles

Oracle Price: Utilizing Chainlink as Metronome Synth’s Oracle provider, the Oracle Price is the price that Chainlink broadcasts to Metronome reflecting the value of the underlying asset for each synthetic or collateral.

Collateralization Factor (C-Factor) - The C-Factor (Collateralization Factor) is a rolling number ratio comparing the value of deposited collateral assets to that of minted synthetic assets. The C-Factor also represents the likelihood of liquidation as it decreases toward the threshold.

Collateralization Threshold - Similarly to the C-Factor, the Collateralization Threshold is a number that represents the minimum amount of value to be retained by held collateral with respect to the synthetic assets minted. The threshold is the value at which the collateral and minted asset value are equivalent. A positive threshold represents a healthy portfolio without liquidation, whereas a zero, or negative threshold represents a portfolio that must be rebalanced or liquidated to reach the threshold. MET Yield Farming - MET Yield Farming enables users to potentially boost their APY by generating synthetic assets from productive assets. The resulting synthetic asset is then “looped” into collateral in order to repeat the process and yield additional synthetic assets: effectively looping yield-bearing assets to multiply APY with the added leverage from synths generated. Productive Collateral - Collateral which is yield-bearing in nature. Posting productive collateral allows the user to increase their capital efficiency and boost APY with minted synthetics which can be traded for additional productive collateral and re-deposited. An example of productive collateral, would be the vaETH token from https://vesper.finance. vaETH is a yield bearing token where users can deposit ETH into Vesper’s vaETH pool, and earn yield on their deposit paid in ETH.

Synth Marketplace - Synth’s in-house DEX market for synthetic assets that allows users to swap between various synthetic assets.

Protocol Owned Liquidity - Protocol Owned Liquidity is liquidity that has been provided by the Metronome Treasury for the Metronome token ($MET), msETH and msUSD.

Liquidation - Liquidation is what occurs If/when the value of the synthetic assets falls in value below the required collateral ratio. A liquidation can be done partially, or in full depending on the C-Factor at the time of liquidation. When a liquidation occurs, a user's synthetic positions are closed to bring the C-Factor into a healthy state.

Welcome to Smart Farming, an automated DeFi yield looping engine designed to elevate a user's yield farming experience. Multiplying yield has never been so seamless, by looping your yield through a single click of a button, Smart Farming does all the work by integrating yield sources like Vesper with Metronome's synthetic liquidity to supercharge your assets. Our user-friendly interface ensures individuals of all skill levels can jump in right away, positioning Smart Farming as an ideal solution for anyone seeking to optimize their yield potential.

One of the key competitive advantages of Smart Farming is the absence of manual work, which equips the user with more efficient yield looping through one application, rather than traditional depositing through multiple strategies. In addition, by looping synthetic assets, Smart Farming can expand yield positions in a more streamlined and effective method than traditional lending protocols.

Another unique feature of Smart Farming is its ability to enable users to self-source yield through Metronome. By depositing and generating synthetics, users can effectively create a yield source similar to a lending protocol, further enhancing the flexibility and customization options available to users.

Lastly, Metronome features the ability to mint-swap-deposit in one go against the initial collateral, which alleviates the process of looping multiple times on similar instances in other applications. This cuts gas costs tremendously, with users seeing potentially 90%+ less gas spend vs the manual process.

Smart Farming utilizes advanced yield automation technology to streamline complex strategies into a single process that enables users to achieve looped yield. This process can be accomplished manually at much higher cost, but by utilizing Metronome’s looping architecture, users can obtain the same result in a simplified, gas-sensitive process all through the Metronome dApp.

By depositing productive yield-bearing assets (supported vTokens), users can set their loop amount and generate synthetic assets that represent the same underlying assets as their collateral. This synth can be swapped for the original underlying asset on a supported DEX, such as Curve, and then converted into the yield bearing productive instrument (Vesper).

Example:

1. User deposits USDC into Vesper Finance USDC pool and receives vaUSDC tokens (yield bearing token), alternatively the user could deposit USDC directly into Smart Farming and skip step 2.

2. vaUSDC is deposited as collateral into Metronome’s Smart Farming.

3. User can then set comfortable loop multiplier amount.

4. msUSD is minted.

5. msUSD is automatically swapped on a DEX for USDC.

6. USDC is then deposited into Vesper Finance USDC pool which gives back vaUSDC.

7. The vaUSDC position is deposited as collateral to Metronome, making the total position safely overcollateralized.

Disclaimer: Looping deposits for yield increases the risk of liquidation. The more looping that is deployed, the higher the risk of liquidation.

When utilizing Metronome Synth and Smart Farming, users must understand the underlying risks of each asset on the application. Synthetic assets are generated by the user against deposit asset(s) as a Collateralzed Outstanding Position (COP). Both Collateral and Synthetic assets may be subject to market volatility. If the value suddenly drops due to market conditions, a portion could be liquidated to repay any synths generated and keep the position healthy and collateralized. Although we ensure a multitude of security audits, Smart Farming and participating in DeFi protocols comes with inherent risks.

Oracles

Collateral and synthetic assets alike require oracles for Metronome to value the assets accordingly. There are several risks associated with oracles that should be considered:

• Manipulation: If an attacker can manipulate the oracle price feed, they can mint synthetic assets without proper collateralization, enabling them to perform an attack against the DEX markets that support synthetic asset liquidity.

• Failure: If price updates are not provided for an extended duration, the proper functioning of Metronome Synth might be compromised. This could potentially lead to challenges with liquidations and inaccuracies in the calculation of collateralization ratios.

• Delay: In rapidly changing markets, there may be instances where oracles experience a delay in updating prices. This can impact the valuation of synthetic assets and the collateralization ratio of users' positions. Consequently, this might influence liquidation decisions, potentially resulting in unintended liquidations or the continuation of undercollateralized positions. This could also cause users to see slight inaccuracies on prices set in the Synth Marketplace when trading synthetic assets internally.

Market Volatility

Price volatility can harm the collateral position, which is responsible for covering liabilities and ensuring the solvency of the protocol. If the value of the collateral falls below the amount outstanding, it poses a significant risk that the collateral can be liquidated by increasing the required Liquidation Point. Additionally, price volatility also affects the liquidation process, as the liquidator's margin must be sufficient to enable profit.

DEX Liquidity & Pricing

Users may be unable to complete the looping position at competitive rates if the integrated DEX does not have sufficient liquidity due to high asset/pool utilization. Additionally, users may realize losses entering and exiting the Synthetic assets on the open market (through Smart Farming or otherwise) if they execute trades at unfavorable rates. Synthetic assets are “soft-pegged” to the underlying assets and expected to deviate up-and-down from the peg in the short term.

Health factor

As positions are over-collateralized, you must maintain an acceptable health basis when utilizing Metronome Synth. Your health factor can be found in the dApp under the pool position. Note that any type of additional mintage, whether direct or via Smart Farming, will lower your Health Factor and increase probability of liquidation.

The health factor of a user's outstanding position is a significant metric that determines whether their position is at risk of being liquidated. The process of calculating the health factor involves determining the maximum amount of outstanding assets a user can issue, known as the issuable limit. This limit is calculated by multiplying the deposit value denominated in the underlying token by the collateral factor of the deposit token, which represents the percentage of the deposit value that can be used to issue outstanding assets, as determined by the protocol governance.

To determine the deposit value in USD, the total value of collateral deposited by the user is converted to USD using the price from the master oracle. If a user's outstanding position is less than or equal to their issuable limit, their health factor is considered healthy. However, if their outstanding amount exceeds their issuable limit, their health factor falls below the healthy threshold, and their position is at risk of being liquidated.

I have assets deposited in Synth, why won’t Smart Farming recognise them?

Currently, Smart Farming requires a direct deposit from your connected wallet in order to loop your positon. If you would like to utilize your pre-existing deposited funds, then you will need to withdraw them first.

To learn how to Smart Farm, you can watch our step-by-step guide or follow the instructions below:

1. Connect your wallet and choose your network (ETH, Optimism, and Base currently available). Make sure you have enough of your desired collateral to deposit, as well as ETH for gas.

2. Choose your collateral. There are currently a wide variety of assets to choose from on ETH, Optimism, or Base. If you choose to deposit naked collateral, Metronome will automatically convert these into vaAssets for you.

3. Set Loop Amount (up to 5x). Make sure you are comfortable with the risk. In doing so, you can see the estimated APY, as well as your health factor.

4. Set your slippage tolerance. This will enable Smart Farming to acquire synthetic assets on the open market at a rate you are comfortable with.

5. Confirm the transaction.

The maximum "loopage" available for users when looping their positions is determined by the deposit token's collateral factor (CF). This value can be calculated using the equation maxLeverage = 1 / (1 - collateralFactor). As the collateral factor increases, so does the maximum loopage possible.

Metronome Smart Contracts

Mainnet

Optimism

Base

MET 2.0

Workstreams

Locking $MET

Users can directly lock their $MET tokens to receive esMET in return. When users decide to lock $MET in exchange for esMET, the amount they receive isn't just a straightforward conversion. Instead, it considers the maximum boost (a fixed value of 4), lock-up duration, and the maximum lockup permitted (2 years/730 days). Notably, unlike some other protocols such as Curve, esMET does not have a decay over time, and will not require relocking to maintain maximum benefits.

To work out how much esMET you will receive, use the following formula:

Boost: MaxBoost * Lockup Duration / Max Lockup

Boosted Balance: Balance * Boost

esMET: $MET Balance + Boost Balance

Example:

Suppose a user decides to lock their 1000 $MET tokens for a period of 2 years (730 days). Using the formulas above:

Boost: 4 * 730 / 730 = 4

Boosted Balance: 1000 * 4 = 4000

Total esMET Balance: 1000 + 4000 = 5000 esMET

esMET is designed to be transferable (as an ERC-721 token), enabling users to directly send or receive it. This means that even users without any $MET can hold esMET, whether they receive it from Metronome as an incentivized reward or from another user.

Auto repay is Metronome’s version of unlooping a position, enabling users to repay with ease. If a user wants to unloop their position, they can input the number of collateral assets they intend to use for repayment (the corresponding dollar value is displayed). Upon doig so, users will be shown their anticipated collateral ratio after repayment, as well as an approximation of how many synths will be bought back for the repayment process. Once users confirm by clicking the "Repay" button, a transaction will be executed and then confirmed in the users wallet with the newly updated position displayed.

Example:

1. User navigates to the Metronome Smart Farming platform.

2. User selects vaUSDC as their preferred collateral.

3. The user's vaUSDC position is looped according to the users preference.

4. When the user decides to unloop (auto repay) their position, the user will retains their vaUSDC tokens within the Metronome platform.

Additionally, if a user deposits naked collateral (i.e. USDC) for use in Smart Farming, the contract will deposit the user's USDC into Vesper, generating vaUSDC. Upon unlooping, this can easily be converted back to the original USDC position via the Vesper pools on Metronome, or by visiting the Vesper app.

The smart contract manages the following steps:

1. Exchanges the user’s collateral for the necessary synth amount.

2. Uses the exchanged synth to repay the users outstanding assets.

3. Cancels the transaction if the exchanged synth amount exceeds the user’s total outstanding amount.

4. Confirms the user’s account is healthy after the swap.

Note: Any user that has generated synthetic assets can use the auto repay functionality.

You can perform Auto Repay by doing the following:

1. Navigate to the Metronome application.

2. Hover over your chosen synth asset and click “Repay”.

1. Next, select how you would like to repay, in this case, we will be using “Auto Repay”.

1. Here you will be able to see your outstanding position, choose your collateral, and set your slippage tolerance.

1. Once you are comfortable, hit “Repay” and confirm the transaction.

2. Now you will be able to see your updated stats and health factor on the dashboard.

Currently, $MET serves as the governance token for the Metronome ecosystem. However, the broader vision for $MET goes beyond just governance, with tokenomics being used to enhance the overall user experience and address long-term limiting factors, such as liquidity.

A notable development in DeFi tokenomics was the adaptation of the vote-escrow model, first championed by Curve. Their integration of governance, staking, and liquidity pool rewards enabled the CRV token to revolutionize liquidity provision. Building on this, Andre Cronje's approach of the ve(3,3) model - first proposed in Solidly which draws inspiration from Curve's vote escrow and Olympus' 3,3 model - has been implemented in projects like Velodrome with great success.

In earlier systems, users simply locked their tokens to gain benefits, which disappeared once the position was closed. The vote-escrow model, however, added an element of choice and predictability. Users selected how long they were willing to lock their tokens for, which, in turn, provided users certain privileges, as well as giving a clear view of how many tokens were locked up at any given moment. This level of transparency led to a more stable token amidst volatile market conditions. Due to its success, this has led to many protocols molding their treasuries, liquidity, and incentives around this model, with the goal of being more sustainable and future-proof.

Yet, while the advantages of vote-escrow are clear, it came with its own set of challenges. A commitment of up to four years (within Curve) for locking tokens can be daunting for many. Not only that but the decay mechanism built-in means users need to continuously relock to retain maximum benefits. The ve design also restricts token transfers once locked, which ultimately led to workarounds like Convex, whose strategy is based off pooling and locking CRV tokens on a user's behalf, then issuing a transferable wrapper token back to them. The demand for such solutions has been evident in their control of the current locked CRV weight.

While the foundation of Metronome draws inspiration from what Curve does effectively, there are distinct differences in the approach, especially when addressing the ve model's challenges.

Transferability: In Metronome, esMET positions are encapsulated as ERC-721 tokens. This design choice enables the transfer of positions on the open market, providing users with greater flexibility.

Early Exit: Users aren't bound to their positions for the full duration. esMET enables early exits, offering more control over token commitments.

Multiple Positions: Unlike models where a single user is limited to one position, Metronome enables users to hold and manage multiple esMET positions simultaneously. Note: Managing multiple positions might require additional attention.

In order to obtain esMET, lock your $MET tokens following the steps below:

3. Choose a duration using the slider (1 week to 2 years).

4. Click "Lock", review the details, and confirm the transaction once satisfied.

Understanding Governance

Within the Metronome ecosystem, users will need to lock up their $MET tokens in order to vote on proposals. esMET holders play a pivotal role in emission-related decisions. This includes voting on directions for the Smart Farming boost, setting liquidity and esMET requirements to qualify for the boost, deciding on what assets should be added to the application, and making choices on protocol-specific matters, such as increasing or decreasing collateral ratios.

In order to unlock $MET tokens, follow the steps below:

2. Next, view your positions, select "Unlock", and approve the transaction.

3. Please note: Tokens locked within the past 24 hours cannot be unlocked immediately.

Within DeFi, early unlock fees are a common mechanism designed to motivate users to remain engaged with the ecosystem. In the context of Metronome, should users opt to unlock their $MET tokens before the end of their designated lock-up period, they would incur an early unlock fee. This penalty initiates at 50% and decreases in a linear fashion as time elapses, reaching 0% by the end of the lock-up period. Any fees amassed from this penalty are redirected to the Metronome DAO Treasury. This is a systematic release, adhering to the following conditions:

Penalty: If users choose to unlock their tokens early, they will face a penalty determined by the linear decaying formula up until their original unlock period ends. Essentially, the longer a user waits into their lockup period, the smaller the penalty will be when withdrawing.

Example:

Let's say you locked your $MET for 1 year, but after 6 months, you decide to withdraw them early.

Given the penalty decreases linearly from 50% to 0% over the course of the lock duration (1 year in this case), at the halfway point (6 months), your penalty would be 25%.

If you had locked 100 $MET, you'd pay 25 $MET as a penalty for unlocking them early.

500 esMET = 0.20% fee (20% discount)

5,000 esMET = 0.15% fee (40% discount)

50,000 esMET = 0.10% fee (60% discount)

500,000 esMET = 0.05% fee (80% discount)

The maximum value of 1 locked $MET is 5 esMET, therefore to reach the highest tier and the best discount rate, users would need to lock up 100,000 $MET for the longest period (2 years).

Example:

If a user locks 100 $MET for the max lockup period, they would receive 500 esMET, netting them a 20% discount on marketplace fees. This would be highly favorable to those power users performing more frequent and larger trades.

In order to ensure the health of over-collateralized positions within the Metronome Synth Protocol, assets are assigned collateralization ratios. Each individual collateral asset on Metronome Synth is assigned a Collateralization Ratio (CR) in accordance with the risk framework, which scores collateral assets according to values like open market liquidity and smart contract risk. The collateral requirements of a user’s account is assessed as the value of each collateral deposited * its collateral factor.

Users can create synths with a USD value based on the user’s total collateral limit, which is determined by each asset's Collateral Factor (CF). You can calculate the maximum USD value of synths that can be generated using this formula:

Issuable limit in USD = Sum of (CR * assetDeposited * USD value) - current outstanding amount in USD.

The overall health of an account is assessed by comparing the total collateral value with the total value of synths generated. ‘debtPositionOf’ calculates the health status of a user's outstanding position in USD. If the outstanding amount is within the issuable limit, ‘_isHealthy’ is set to true. ‘_issuableInUsd’ is calculated as the remaining amount of issuable value. This function is critical in determining eligible positions for liquidation and calculating the required amounts of synthetic tokens and collateral. The ‘quoteLiquidateIn’ function is then used to calculate the amount of synthetic tokens required to liquidate the unhealthy position and the appropriate amount of collateral to be seized, including protocol fees and liquidator incentives.

When a user’s outstanding synthetic mintage is greater than the maximum allowed mintage of their account, they may be subject to liquidation. Anyone can call the ‘liquidate()’ function, specifying the account to be liquidated, the synthetic token, and the amount to repay.

The liquidator must have enough balance of the synthetic token to repay the specified amount. After the liquidation call, the contract burns the synth from the liquidator's balance and decreases the generated position of the account of the liquidated user.

Once the amount of collateral has been calculated, it is taken from the liquidated account and transferred to the liquidator. A fee may also be taken from the account and sent to the fee collector. Currently, the liquidation fee is an extra 18%, with 10% allocated to the liquidator and 8% to Metronome.

Liquidation example:

User A deposits $1000 of USDC into Metronome Synth with a Collateralization Ratio (CR) of 85%. This gives them up-to $850 in value to generate their chosen synthetic asset, in this example we will go with msETH: Issuable limit in USD = (85% * 1000 USDC * 1 USD) = $850 of msETH.

The collateral value is $1000, and the outstanding value is $850 of msETH. User A's account is currently healthy.

Later, the value of msETH increases, causing user A's account to become unhealthy. Let's assume the value of msETH has increased to the point where the outstanding msETH is worth $900.

User B, the liquidator, decides to perform a liquidation on user A. User B must alleviate enough of their outstanding positon through liquidation so that user A’s remaining position becomes healthy once again. There is an additional 18% premium subtracted from user A’s liquidated collateral, split between the liquidator and the Metronome Synth protocol.

1. User B acquires $300 worth of msETH and applies it towards the liquidation to partially repay user A's position.

2. User A's oustanding position is reduced by $300 worth of msETH, leaving them with $550 worth of msETH in minted assets.

3. Correspondingly, 354 USDC is seized from user A's account as collateral (equal to the amount of outstanding synths repaid plus the 18% liquidation fee, or 300*1.18).

4. The 300 USDC seized from user A's account is delivered to user B.

5. An additional 18% liquidation fee is applied to the seized collateral, so 54 USDC is split between user B and Metronome Synth. User B receives 10% on top of the size of liquidation as a bonus (30 USDC) and Metronome receives the remainder per the liquidation premium (24 USDC).

After the liquidation, user A's account now has $550 msETH and 646 USDC as collateral. This puts user A’s outstanding position at <85% the value of the remaining collateral, making user A’s position healthy once again. Note that there is no grace period following a liquidation. User A could be continually liquidated should they fail to remediate their position and the price of ETH continues to increase versus USDC.

Prerequisites for Liquidation

1. The ‘_debtToken’ and ‘_syntheticToken’ must be valid and exist in the system.

2. The account to be liquidated (‘account_’) must have an outstanding amount (i.e., a non-zero balance in ‘_debtToken’).

3. The account's collateralization ratio must be less than the minimum collateralization ratio.

4. The amount of outstanding assets to be repaid during the liquidation (‘amountToRepay_’) must be within the acceptable range, defined as a percentage of the total outstanding amount.

5. The liquidation process must not be paused.

Liquidation Process

Users can liquidate positions by calling the ‘liquidate()’ function. Here is a breakdown of the liquidation process:

1. The liquidator calls the ‘liquidate’ function, providing the account to be liquidated (‘account_’), the debt token (‘_debtToken’), the synthetic token (‘syntheticToken_’), and the amount to be repaid (‘amountToRepay_’). This will also check if the prerequisites explained above for liquidation are met.

2. The liquidation amount is converted to the equivalent amount of collateral that needs to be seized from the liquidated account. This is done using the ‘quoteLiquidateOut’ function, which returns three values: ‘_totalSeized’, ’ _toLiquidator’, and ‘_fee’.

3. The function checks if the total seized collateral (‘_totalSeized’) is less than or equal to the liquidated account's collateral balance. If not, it reverts with an error.

4. The synthetic tokens are burned from the liquidator's account for the specified ‘amountToRepay_’. The corresponding debt tokens are also burned from the liquidated account.

5. The collateral is seized from the liquidated account and transferred to the liquidator's account (‘_toLiquidator’).

6. If there is a fee (‘_fee’) associated with the liquidation process, it is seized from the liquidated account and sent to the fee collector (‘defined in poolRegistry.feeCollector()’).

7. Finally, the ‘PositionLiquidated’ event is emitted, providing details about the liquidation process, including the liquidator's address, the liquidated account's address, the synthetic token, the amount of outstanding assets to be repaid, the total seized collateral, and the fee.

Calculating Profitability

As mentioned above, when liquidating a position, Metronome will take 8%, and the liquidator will receive 10% of the fee associated with the liquidation process. To evaluate profitability, users should consider the following factors:

1. Monitor positions in the Synth protocol to identify undercollateralized accounts that are eligible for liquidation.

2. Calculate the potential profit for liquidating a position by determining the value of the seized collateral (including the liquidator's share of the fee) and comparing it to the number of synthetic tokens they would need to repay.

3. Take into account the optimal route for acquiring those synthetic tokens for repayment (minting through Metronome or purchasing off the open market).

4. Estimate the gas costs associated with executing the liquidation transaction. The gas costs will depend on the network congestion and the complexity of the transaction. If possible, it’s best to wait until times when the network is less congested. You can use an Ethereum Gas Tracker tool such as Etherscan to view gas prices at any time.

5. Weigh the potential profit against the estimated gas costs.

6. Continuously monitor the market prices of the synthetic tokens and the underlying collateral. Price fluctuations may impact the profitability of liquidation.

About Metronome 2.0

Metronome is continuing its journey by relaunching and innovating for DeFi in 2022. Metronome was a pioneer in the DeFi space when it was launched in June 2018. With an elegant system of four smart contracts, Metronome has had success with its daily auctions and DEX functionality. Since Metronome’s launch, DeFi has evolved due to the composable nature of protocols. Relaunching Metronome will provide upgraded token features, security enhancements, DeFi composability, a new development roadmap, and the formation of a Metronome DAO.

View the contract address.

Motivation

Metronome’s migration opens the door for new possibilities and product development. After the migration is complete, the Metronome team intends to develop new and innovative DeFi primitives, including new autonomous primitives similar to those found in MET 1.0.

These primitives will be designed to create value for the Metronome DAO, and will serve as a key unlocker for the “Metronome 2.0 flywheel.” The Metronome team has scoped and begun R&D on a potential first new DeFi primitive to deploy as part of the MET ecosystem.

In addition, the team is exploring new-and-improved auction mechanics that are easier for users to engage with and for other protocols to compose unto. We look forward to presenting proposals to roll out these upgrades to the Metronome DAO.

Follow along on Medium and Twitter for the latest updates.

Join us on Discord and Telegram to engage with the Metronome team and community.

Supply Distribution

At the time of migration, Metronome had a total supply of 14,377,915 MET. A snapshot of the Metronome token holders was taken on August 23, 2022. which provided the supply distribution for the MET 2.0 governance token.

The newly formed MET DAO will have the power to propose and vote to increase mintage and continue Metronome’s legacy auctions in the future.

• Community/MET 1.0 token holders (1,874,178 MET)

  • The MET 1.0 token holders will be able to claim these MET 2.0 tokens on a 1:1 basis.

• Uniswap Liquidity pool (2,000,000 MET)

  • An initial allocation of 2,000,000 MET 2.0 tokens will be allocated to fund a Uniswap V3 liquidity pair

• Team and Strategic Advisors (2,000,000 MET)

  • Mirroring the MET 1.0 launch, 2,000,000 MET 2.0 tokens (Unlocking evenly over a 24 month vesting period) have been allocated for the Metronome 2.0 founding team and strategic advisors.

• Metronome DAO Treasury (8,203,669 MET)

  • The total amount of MET 1.0 in the Autonomous Converter Contract minus allocation to Uniswap at the time of the snapshot has been allocated to the Metronome DAO Treasury.

Token Migration Guide

All MET 1.0 holders receive an equal amount of MET 2.0, claimable immediately at relaunch. MET 2.0 tokens are distributed through a merkle claims process. See the Merkle Claims contract on Etherscan.

The easiest way for users to migrate their tokens is by accessing the claims through Pure Finance merkle claims module.

Connect your Web3 wallet, such as Metamask, to Pure Finance and input 60 into Claim ID.

Pure Finance will automatically search to see a claim associated with your wallet address. If you are eligible to claim MET 2.0, click ‘CLAIM’ and follow the instructions prompted by your wallet.

If you held MET in the Metronome wallet, you will need to export your keys to a Web3 wallet. (See Transition Plan for more details.)

If you held MET in an exchange, you must contact the exchange for support as it is up to the exchange to execute the claim.

The FeeProvider contract is responsible for managing fees associated with different actions within the system, including deposits, withdrawals, issuances, and liquidations. Additionally, it implements a tier-based fee discount system which depends on the quantity of esMET tokens held by an individual. This contract offers methods for updating fees and discount tiers, as well as for determining the appropriate swap fee in relation to a user's esMET balance.

The RewardsDistributor contract serves multiple purposes in the Metronome protocol. It allocates rewards to users who deposit collateral or create synths and collaborates with both DepositToken (suppliers) and DebtToken (borrowers) contracts. It also not only tracks each user's right to rewards, considering the number of tokens they have deposited or generated and the holding duration, but also calculates and updates index values for eligible tokens based on their total supply and holding period. These index values are utilized to determine each user's share of rewards, which can be claimed as reward tokens and transferred to their wallets.

To support reward management, the contract includes several functions, such as updating token speeds and determines the claimable amount for each user. Additionally, it features modifiers that ensure access is limited to authorized accounts and the appropriate token contracts are used. The Metronome protocol is also designed to interact with Vesper in order to issue rewards. If a user deposits a Vesper pool asset, like vaUSDC, it will still drip those rewards to the user. This ensures that users don't miss out on Vesper pool rewards when they choose to interact with Metronome.

The rewards accrual rate in the Metronome ecosystem is synchronized with the Vesper reward rate approximately every 48 hours. Please note that Metronome doesn't guarantee that the reward rates will match exactly. If deposits or withdrawals occur between two sync calls, the rewards rate may differ from the rate in the Vesper pool until the next sync call.

Here's how it works:

Deposit: When you deposit vaUSDC in the Metronome ecosystem, the underlying smart contracts are triggered to interact with the RewardsDistributor contract. This deposit kickstarts the rewards process, earning you rewards at the rate defined in the RewardsDistributor contract for this particular asset.

Reward Accrual: Your reward earnings are tracked and calculated by the RewardsDistributor contract. This calculates your share of rewards considering the number of tokens you've deposited and the duration of the deposit.

Syncing: The rewards rate is synced with the Vesper pool rewards rate approximately every 48 hours.

Claiming rewards within the Metronome system is an ongoing process. Users who deposit vaUSDC for example into Metronome begin accruing rewards, however, the Metronome contracts must first claim the rewards from Vesper. Currently, this is scheduled every one to two weeks, but future updates will automate the Synth contract, eliminating any lag.

Keep in mind that the balance of reward tokens in the RewardsDistributor contract may sometimes be less than the sum of the rewards claimable by all users. This discrepancy happens because the Vesper rewards for vaUSDC have not yet been claimed by the Keeper.

This does not mean that all users have to wait until the next Vesper claim cycle. If the contract still holds reward token balances from previous claims that users have not yet redeemed, these users will not need to wait. They can claim their rewards as long as there's a sufficient balance in the contract.

DAO Treasury

A total of 10,620,924 MET and 8,306 ETH has been allocated to the MET DAO treasury (8,620,924 MET excluding Liquidity allocation). The MET DAO treasury will not be able to propose or participate in any voting. This allocation was transferred to the new MET DAO from the Metronome 1.0 ACC. The majority of these funds will remain in the primary treasury multisig wallet. The purpose of the MET DAO treasury is to fuel the continued development of the Metronome ecosystem by providing funding for new Metronome products and collaborating with leading DeFi projects. Treasury funds may be deployed per the voting outcomes of the MET DAO participants.

Uniswap V3 (Protocol Owned Liquidity)

The MET DAO treasury will also be utilized to provide protocol-owned liquidity across leading DEXes. The MET tokens held in the Uniswap v3 trading pair cannot be voted with until acquired by a user. Initial liquidity is posted as follows:

250,000 MET and 272,500 USDC (converted from ETH); 0.3% fee tier; full range coverage.

Note that concentrated range liquidity from the remaining 1,750,000 allocated MET will be voted upon following migration.

Operations

In addition, a satellite wallet is planned that will fund ongoing operations. This wallet will be a separate multisig wallet with separate signers that will hold a modest amount of MET that will be utilized at the discretion of the signers for ongoing operational expenses.

I was a MET 1.0 token holder, how do I claim MET 2.0?

Why did you relaunch Metronome?

Metronome 1.0 worked as intended for 4+ years and was a great example of what could be accomplished in the earliest days of DeFi. DeFi has evolved by leaps and bounds since 2018, and the Metronome team felt it important that our product evolve with it. Metronome 2.0 is being designed with a greater scope than the original version, and should fit more effectively in the DeFi ecosystem.

Do you still have daily auctions?

The daily auctions as they existed in Metronome 1.0 will no longer take place in Metronome 2.0. Future MIPs may bring back Metronome auctions in the future.

Do you still have the Autonomous Converter?

The autonomous converter no longer exists in Metronome 2.0 as "Uniswap v3 provides an AMM, serving the function for which the autonomous converter was designed to do, while offering additional enhancements, such as “concentrated liquidity”, an innovation that allows liquidity providers to assign liquidity within a specified range of prices (versus every price from 0 to infinity like Uniswap v2 or the Metronome Autonomous Converter). For MET 2, concentrated liquidity allows us to provide enough ETH to buy back the entire circulating supply around market price while also unlocking all of the excess ETH that otherwise must stay in the ACC.

Do I have to claim my MET 2.0 tokens by a certain date?

No, you do not. The wallet that was captured during the snapshot holding the original Metronome token will be able to claim the new token at any time in the future.

I hold MET in an exchange. How do I migrate them to MET 2.0?

If you held MET in an exchange, you must contact the exchange for support as it is up to the exchange to execute the claim. The Metronome team alerted each exchange in advance of the migration and strongly encourages each exchange to support MET 2.0 and the corresponding token migration.

If I buy MET 1.0 today do I get a MET 2.0 claim?

No, MET 2.0 claims were snapshot at time of migration. Only holders of MET 1.0 at-or-before time of migration receive a 1:1 claim. Tokens purchased after time of migration are wholly independent from MET 2.0.

When exactly was the MET 2.0 snapshot taken?

The MET 2.0 snapshot was taken at block height 15397900 - 08/23/2022 @ 5:13:55pm UTC.

Governance Process

The new MET token is a governance token for the Metronome ecosystem. Immediately after the launch of MET 2.0, MET token holders will be able to participate in the MET DAO by proposing and voting in platform decisions.

Governance Phases

Metronome’s governance will follow a progressive decentralization roadmap, reaching an end state of full decentralization and community led governance via the MET DAO. The anticipated duration of each phase shown below is only an estimate, and the actual duration may be shorter or longer depending upon such factors as community size, voting participation and development pipeline. During the initial 3 phases, the decision to move to the next phase will be at the discretion of the multisig including its assessment of safety concerns.

MET DAO members can engage by proposing and developing Metronome Improvement Proposals (MIPs), casting votes on MIPs, and sharing their opinion in our forums.

Votes can only be cast by holders of MET tokens, including holders of locked/vesting tokens. The vote passage/approval requirements are as follows:

MIP-000: Title

A MIP number, like MIP-001, will be assigned and the proposal author should give it a short, descriptive title.

Summary

In easy-to-understand language, describe the purpose of your proposal and what it intends to achieve for the Metronome ecosystem.

Motivation

Briefly describe how this proposed change will impact the Metronome ecosystem.

Specification

In detailed, technical language, describe the inner workings of your proposed contract.

Appendix

Include test cases, data, etc.

Metronome

Website - https://metronome.io

App - https://app.metronome.io

Smart Farming - https://app.metronome.io/eth/smart-farming

Governance

Snapshot - https://snapshot.org/#/metronome.eth

Tally - https://www.tally.xyz/gov/metronome-dao

Forum - https://discourse.metronome.io/

Socials/Community

Twitter (X) - https://x.com/MetronomeDAO

Threads - https://threads.net/metronomedao

Discord - https://discord.gg/metronome

Telegram - https://t.me/metronometoken

Guild.xyz - https://guild.xyz/metronome

Transition Plan

Support for the desktop and mobile Metronome wallet is being discontinued at the launch of Metronome 2.0. Any user that is currently storing funds on this wallet will need to migrate to a Web3 wallet, such as Metamask.

Please reference the following guide from Metamask on how to handle the migration from the Metronome wallet: ‘How to restore a Metamask wallet from a private seed’. This guide will instruct you on how to create a new Metamask wallet utilizing the original 12-word seed phrase provided when your Metronome wallet was created.

Alternatively, if you already have a wallet such as Metamask, you can ‘send’ the tokens stored in your Metronome wallet to the new wallet as a normal transaction. If you choose to ‘send’ your tokens out of the Metronome wallet versus importing the seed as referenced above, this must be done prior to the launch of Metronome 2.0 so that your new wallet is included in the snapshot allowing you to claim MET 2.0 tokens.

View the MET 2.0 contract.

MET1.0 OWNER’S MANUAL

View the MET 1.0 owner's manual here.