In Subli’s Twitter Spaces which took place on June 30, 2023, Subli hosted Green Jeff from Vesper Finance to discuss Vesper, Metronome, Smart Contract Strategies, Returns, Future-Proofing, and more! Read our notes below to learn more.
Background
Subli (Host) – Optimistic Podcast and Optimism Ambassador.
Green Jeff (Guest) – Chief Strategy Officer at Vesper Finance and Metronome
Vesper Finance – a platform for easy-to-use Decentralized Finance (DeFi) products.
Metronome DAO – A DeFi ecosystem powered by the Synth Protocol, METDAO, and the MET Token.
Vesper: Secure Yield Aggregator with Smart Contract Strategies
- Jeff explains that Vesper is a yield aggregator where users deposit different crypto assets, which are then sent out to different DeFi protocols like Compound and Aave via smart contract yield strategies.
- These strategies generate yield, which gets compounded for the user and delivered as more of the underlying token. Vesper is made to be safe and dependable, so users can feel secure and worry-free.
- Subli says that Vesper aims to simplify the onboarding process for DeFi users by letting them deposit and forget about their stakes.
- Jeff agrees and explains that initially, Vesper was meant for people who aren’t confident in handling their investments or doing thorough research on other platforms. But they’ve also noticed that other protocols appreciate Vesper’s emphasis on security and use it to enhance the returns of their own offerings.
- Jeff highlights Vesper’s composability and its ability to adapt to new strategies without requiring users to migrate their contracts or perform additional integrations. This makes Vesper future-proof, meaning that even if upgrades are made to the protocol, users won’t have to adjust their own usage or integrations.
- Subli brings up Vesper’s integration with Alchemix, a protocol for self-repaying loans.
- Jeff explains that users can choose to have their yield sourced through Vesper when depositing assets into Alchemy. A recent governance proposal has also been passed to support this integration on Optimism.
- Subli mentions that they have seen Vesper’s website and describe it as a yield aggregator that is a single pool with staked $ETH. This pool involves whitelisted $ETH from Lido that is available on Optimism, and it offers approximately a 10% yield on $ETH. He mentions the availability of $USDC and $OP token on their platform.
- Jeff talks about the focus on productive assets in their organization, highlighting the use of productive wrappers on top of $ETH. He mentions how they started building this concept early on, and considers this an advantage that users enjoy. Jeff highlights the benefits of getting higher yields from already powerful and productive assets.
- Subli highlights the value of earning yields passively and asks Jeff to explain Metronome, a Collateral Debt Position (CDP).
- Jeff explains that a CDP allows you to deposit collateral and mint an asset against it, always ensuring that the collateral value is more than the minted asset’s value.
- He says that Metronome specializes in using productive collateral and supporting multiple types of synthetic assets. Jeff highlights that users can deposit most of the Vesper pool share tokens into the Metronome as collateral and keep the yield from their collateral.
- Subli simplifies the user experience: buy $wstETH, earn staking yield, deposit in Vesper vault for 10% more, deposit $vastETH in Metronome, borrow $stETH, swap for $wstETH, and repeat for higher yield.
- Jeff says that Metronome has a tool called “Smart Farming” that automates this entire process for users. He highlights the convenience of this tool and the importance of a good user experience in DeFi.
- Jeff explains the benefits of their setup for managing risks. He says that increasing exposure also increases risk, but users have the freedom to decide how much risk they want to handle. He suggests that cautious users can stick with Vesper to earn a secure yield, while those who are comfortable with more risk can opt for Metronome.
Achieving Price Pegging and Liquidity Boosts with Metronome on Optimism
- Subli asks how Metronome ensures that the price of the synthetic entity is always pegged to the price of the collateral, considering it depends on synthetic assets.
- Jeff explains that the key lies in maintaining real dollars in the open market to support their activity. Their approach is a combination of protocol-owned liquidity and weekly incentives.
- For example, they’ve allocated $1M from the Metronome treasury to provide liquidity for the $MET/ $ETH market. They also incentivize other market participants to provide liquidity by giving them tokens and possibly voting power, sustaining a vibrant open market.
- Subli asks about the correlation between the borrowing capacity and liquidity.
- Jeff explains that they set the total number of synthetics that can be minted in relation to the liquidity on the DEX. They use mechanisms such as varying the collateral ratio and charging a 1% interest fee to maintain a balanced system.
- Subli asks why they decided to use Optimism as their platform.
- Jeff explains that the choice of a chain is influenced by infrastructure requirements such as the need for an AMM for synthetic assets, various yield sources, a reliable bridge for asset transfer, and oracles for proper price determination.
- They chose Optimism because it meets these requirements, has a lot of protocols they can already use, and offers a grant process that helps them to kickstart the protocol and introduce them to the community.
- Subli sees the grant as a way to market and promotes the community, gaining recognition and attention.
- Jeff believes that the Optimism grant is a great opportunity for their project in the community. They struggled to gain traction on other chains like Polygon and Avalanche due to the lack of community support.
- Subli asks about the grant amount they won and their distribution strategy.
- Jeff says that Vesper received a grant of 75,000 OP tokens. 80% of this will be distributed across the different Vesper pools, with the remaining 20% set aside for subsidizing integration costs with other projects on Optimism.
- Subli asks about any upcoming developments. Jeff reveals that they’re planning integration with Layer Zero, which will make their synthetic assets natively cross-chained, allowing them to tap into deeper liquidity across networks. This is scheduled to be implemented within the next one or two months.
- Subli asks whether they aim to create a yield navigator across multiple chains, allowing users to farm on the best yield across multiple chains or leverage their position and whether this applies to their partnership with Layer Zero for Metronome.
- Jeff explains that users can choose their yield on any chain, such as Optimism or mainnet. He mentions that if there’s better liquidity or a better peg on the mainnet, it will automatically access that for the user, without needing to bridge back to the mainnet.
- Subli highlights that creating a chain-agnostic DeFi protocol is excellent as it allows access to the best yield opportunities across multiple chains. He asks whether this will be deployed in a couple of months.
- Jeff says that if everything goes according to schedule, the code should be sent to audit within a month, with audits typically taking about a month to complete.
- Jeff talks about their future plans after LayerZero. They want to combine Vesper and Metronome to make DeFi accessible for new assets. This can help projects that want to be part of DeFi but don’t have the necessary integrations yet. Jeff thinks this idea is exciting for those projects.
- Subli understands that new projects need a lot of money to get a price feed and build liquidity. They require millions of dollars in TVL and a certain amount of daily trading. Jeff agrees, hoping their solution will simplify DeFi integrations for these projects.
- Subli asks Jeff about his vision for the future of yield optimizers or aggregators, particularly in terms of user experience and his plans with Vesper.
- Jeff sees the end state of the yield optimizer product as DeFi infrastructure. He says that in a few years, it will be more common for these products to be used in the backend of other projects.
- Subli supports Jeff’s idea of connecting DeFi protocols to various yield strategies. It involves using external front-end applications to interact with the protocols.
Check out these important links
- Listen to the Original Twitter Space
- Follow Subli on Twitter
- Follow Green Jeff on Twitter
- Follow Vesper Finance on Twitter
- Follow Metronome DAO on Twitter
Show Information
- Medium: Twitter (Audio)
- Show: Subli Twitter Space
- Show Title: Subli – Vesper & Metronome <> The 🔴Optimistic podcast
- Show Date: June 30, 2023