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With the passing of MIP-24, Metronome can now expand its capabilities to external lending markets
Following the successful passing of MIP-24: the External Lending Market Upgrade, Metronome is now positioned to expand its looping yield strategies to a wider range of assets and a larger user base by integrating with external lending markets.
With this upgrade, Metronome will now be able to mint msUSD, msETH, and msBTC into various lending markets. Similarly to Metronome Synth, these assets do not circulate until they are borrowed by overcollateralized positions.
This also means Metronome will be able to support points-accruing assets like LRTs, along with their associated points programs to broaden the scope of what Metronome can offer.
Currently, there is a significant amount of value (billions of dollars) locked up in various yield-and-points accruing assets like ETH LSTs and LRTs. However, no existing protocol has been able to effectively service looping yield strategies through synthetic ETH loans.
Metronome's upgrade changes that. By supporting these assets in a capital-efficient manner, we are stepping into an underserved market with high demand.
Metronome will first focus on coordinating lending pairs on Morpho Blue and Ajna, utilizing ETH LRTs as collateral and msETH as the borrowable asset. We will work closely with asset providers to ensure any non-compounding APY, such as points or airdrops, flows directly to participants engaging with these deployments.
As we move forward, we will deploy to relevant lending markets in collaboration with trusted curators, like Gauntlet on Morpho Blue. Treasury-owned msAssets will be added to these markets, giving users the opportunity to loop through the lending pairs and explore new yield opportunities.
To make the process smoother for users, we are exploring collaborations with external platforms like Contango to automate the looping process. The full implementation will include dedicated direct deposit support as well as first-party looping front-end support.
This direct deposit functionality will enable Metronome Synth assets to mint directly into approved lending pairs, managed via a specialized Manager contract designed for both efficiency and risk management. We have pre-approved up to $10 million in msAssets for deployment through direct deposit, enabling immediate integration with these markets.
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