Before we get started, this is not a recommendation or endorsement to buy any token(s) mentioned.
Since 2020, Vesper Finance has been known for its easy-to-use DeFi vaults which compete with automated strategy protocols such as Yearn. Vesper was a notable protocol we covered during the last crypto bull market. Among competitors such as Beefy Finance, Pickle Finance, and Yearn, Vesper stood out as one of the more conservative protocols, engineered by OG Bitcoin core contributor Jeff Garzik. While Vesper has seen its own highs and lows during this crypto bear market, it remains a very active protocol continually launching new vault strategies, with now added support on the Ethereum L2 Optimism. Vesper Grow Pools allow anyone to passively earn by depositing single tokens which are then routed through DeFi’s leading yield sources.
In January 2023, a new DeFi multi-collateral and multi-synthetic protocol backed by some of the same builders behind Vesper, launched a sister protocol called Metronome. With Metronome, users can deposit collateral in the form of stablecoins such as FRAX, or more productive assets earning yield in Vesper Finance such as rETH, stETH, or cbETH (see yields below). These collaterals are then used to mint popular crypto synthetics including msUSD, msBTC, and msETH, which can be used in slippage-free trading, leverage positions, or yield farming.
- vaFRAX – 15.7% APY
- vaRETH – 8.91% APY
- vaCBETH – 9.7% APY
- vaSTETH – 5.58% APY
- vaUSDC – 5.6% APY
Metronome allows depositors to supply these different collaterals and mint synthetic assets for a 1% annualized interest fee, charged per block. Depending on the collaterals deposited, there are different LTVs (loan-to-value ratios) set by the protocol here. It is a very familiar setup to what a DeFi pro might use across combination of Synthetix and Aave–deposit multiple collaterals, mint synthetic assets (msUSD, msETH, msBTC), maintain a healthy LTV to avoid liquidation, use synths for leverage or farming, and later pay it all back.
With the recent launch of Smart Farming, Metronome has added a new delight for degens seeking more aggressive yield-earning strategies thanks to a looping application for creating leveraged positions in a few clicks. Looping is when a DeFi application allows for borrowing a correlated, near equivalent asset such as msETH against vaRETH collateral or msUSD against vaFRAX collateral. We recently covered looping on Radiant Capital on Arbitrum. With looping, smart contracts automate minting synths, swapping it on a DEX, redepositing it as more collateral, minting more synths, and so on (see example below). Looping allows DeFi pros to save time and achieve higher leverage with higher net APYs, while maintaining a relatively safer position than borrowing uncorrelated assets, such as DAI against a volatile collateral such as ETH.
Metronome Smart Farming differentiates itself in many ways.
- Smart Farming uses Vesper yield-bearing collateral to mint synthetic assets instead of a traditional lending mechanism found in money markets like Aave.
- Smart Farming streamlines the process of depositing, minting, swapping, and redepositing to loop their position in one transaction and achieve enhanced APYs.
- The real yield…
DeFi Dad is one of the earliest power users of DeFi, having worked with early Ethereum startups going back to 2018, including Zapper.
