msUSD Stablecoin Overview
Overview
From the user’s perspective, the metronome works a bit similar to the classic lending protocol. The user can deposit his collateral (a bunch of tokens). After this, he can mint synthetic assets using collateral factors, mostly 80-85%. There is no redemption functionality, only to repay the debt. So, the random arbitrager can’t redeem bought tokens and drain the treasury.
Reserves
Atm: TVL: $24.7M, Minted: $21.1M
Funds are separated between 3 chains: eth, opt, and base. Treasuries and Protocol Owned Liquidity.
Revenue
All revenues move to the treasury, and DAO can use funds treasury as well.
- Deposit /Withdrawal fee
- Liquidation fee
PSM
Based on arbitrage opportunities: a) all synth assets can be swapped between each other inside the protocol. So if the peg is weak arbitrager can buy cheap assets (e.g. msUSD), swap to a stronger one (msETH), and sell msETH on the market. Such buys will increase the peg. b) if the peg is weak collateral providers can buy back their msUSD to withdraw their collateral and earn profit.
Onchain security
Each chain operates by the Off-chain governance (snapshot) and 2/4 multi-sig gnosis wallet.
Summary pros and cons
- The massive protocol covers 3 chains and a few synth assets in one ecosystem.
- The protocol uses immunefi (up to 100k USD) to cover some possible issues.
- There are a couple of audits performed on the protocol including Quantstamp https://github.com/autonomoussoftware/metronome-synth-public/tree/main/audits
- Depeg is possible and should be handled by the arbitragers.
- A bank run is possible but should involve all synth assets with huge sales volumes.
