MIP-006: Synth Liquidity and Treasury Diversification
Summary
Utilize existing treasury assets to supply protocol owned liquidity to msUSD and msETH pairs and convert some treasury ETH into other assets for the purpose of building liquidity.
Motivation
Metronome Synth enables a strong utility for holders of supported collateral assets to earn additional exposure by minting synthetics. However, that activity is only as viable as open market liquidity on these synthetic assets can offer these synthetics around the underlying asset price.
Existing treasury positions can be used to mint msUSD and msETH and paired with treasury ETH to ensure a healthy amount of liquidity from launch.
Additionally, ETH can be converted into other DeFi tokens that incentivize open market liquidity providers. Analysis suggests that Convex (CVX) currently offers the best cost-per-liquidity among popular incentive tokens (CRV, FXS, SDT, etc.).
This proposal intends to deploy protocol owned liquidity and acquire incentives tokens, rather than providing liquidity rewards or market bribes from treasury holdings outright. This means that treasury assets will be utilized, not forfeit, as a means to build liquidity.
Specification
Initial protocol owned liquidity targets for our msETH and msUSD markets are as follows:
Deposit the existing 1,000 vaETH treasury position to Metronome and mint 300 msETH + 150,000 msUSD
Convert ~125 ETH to $150,000 worth of FraxBP
Deploy 300 msETH + 300 ETH from treasury to a new Curve pool
Deploy 150,000 msUSD + $150,000 of FraxBP to a new Curve FraxBP metapool
Additionally, the treasury will convert an additional 420 ETH to acquire ~185,000 CVX. This CVX will be locked as vICVX and used to vote on both incentives towards each of these Curve pools. Voting will initially target ~67% to the USD pool and 33% to the ETH pool.
MIP-006: Synth Liquidity and Treasury Diversification
Summary
Utilize existing treasury assets to supply protocol owned liquidity to msUSD and msETH pairs and convert some treasury ETH into other assets for the purpose of building liquidity.
Motivation
Metronome Synth enables a strong utility for holders of supported collateral assets to earn additional exposure by minting synthetics. However, that activity is only as viable as open market liquidity on these synthetic assets can offer these synthetics around the underlying asset price.
Existing treasury positions can be used to mint msUSD and msETH and paired with treasury ETH to ensure a healthy amount of liquidity from launch.
Additionally, ETH can be converted into other DeFi tokens that incentivize open market liquidity providers. Analysis suggests that Convex (CVX) currently offers the best cost-per-liquidity among popular incentive tokens (CRV, FXS, SDT, etc.).
This proposal intends to deploy protocol owned liquidity and acquire incentives tokens, rather than providing liquidity rewards or market bribes from treasury holdings outright. This means that treasury assets will be utilized, not forfeit, as a means to build liquidity.
Specification
Initial protocol owned liquidity targets for our msETH and msUSD markets are as follows:
msETH: 600 ETH (300 ETH + 300msETH)
msUSD: $300,000 (150,000 msUSD + 75,000 USDC + 75,000 FRAX)
This will be achieved by the following:
Deposit the existing 1,000 vaETH treasury position to Metronome and mint 300 msETH + 150,000 msUSD
Convert ~125 ETH to $150,000 worth of FraxBP
Deploy 300 msETH + 300 ETH from treasury to a new Curve pool
Deploy 150,000 msUSD + $150,000 of FraxBP to a new Curve FraxBP metapool
Additionally, the treasury will convert an additional 420 ETH to acquire ~185,000 CVX. This CVX will be locked as vICVX and used to vote on both incentives towards each of these Curve pools. Voting will initially target ~67% to the USD pool and 33% to the ETH pool.