Staked msUSDPrice

(SMSUSD)

msUSD is a synthetic stablecoin pegged to $1, created by locking collateral within the Metronome Synth protocol. In contrast, smsusd is the yield-bearing version of msUSD. It serves as a receipt token for users who deposit their msUSD into staking pools to earn additional protocol rewards and fees. While msUSD is the base synthetic asset, smsusd is the instrument used to generate secondary returns.

While the protocol aims for stability, smsusd can experience price fluctuations due to market liquidity. On decentralized exchanges, thin liquidity can lead to a discount if there is a high volume of sellers. Even if the protocol recognizes the token at full value for debt purposes, the external market price is determined by supply and demand within liquidity pools. Without sufficient trading depth, the market price may not reflect the underlying debt value.

To obtain smsusd, users first provide collateral, such as ETH, to the Metronome Synth protocol to mint msUSD. This msUSD is then taken to a partner yield platform or a smart farming pool. By depositing the msUSD into these specific vaults, the user receives smsusd as a representation of their staked position, allowing them to participate in yield-generating strategies.

Metronome and Vesper are partner protocols that manage different aspects of the synthetic asset lifecycle. Metronome handles the minting and collateralization of assets like msUSD. Vesper Finance provides the yield-bearing infrastructure and strategies where these assets can be staked. Consequently, most staked versions of Metronome synths are managed and rewarded through the partner protocol's technical framework.

Yes, liquidation is a risk for users who use smsusd as part of a leveraged or looping strategy. If smsusd or the underlying msUSD is used as collateral to mint further assets, the user must maintain a healthy collateralization ratio. If the value of the original collateral drops significantly, the protocol may liquidate the position, which includes the assets backing the staked tokens, to maintain system solvency.

Redemption requires a multi-step process. First, the user must return the smsusd to the staking pool to withdraw their msUSD. Then, that msUSD must be used to repay the outstanding debt on the Metronome protocol. Once the debt is cleared, the original collateral is unlocked. Users who purchased smsusd on an exchange cannot redeem it for collateral directly unless they have an existing minting position to settle.