This week I’ll be taking a closer look at:

Let’s jump in.

OK, I know the title is one of those cliché bold claims, but hear me out. I explain why I’m so bullish below, especially in “The Opportunity” section.

I had my first call with Metric back in June. A friend introduced me, and I’d never heard of them before. Since then, I’ve had a couple of calls with the team and we’ve been going back and forth on Telegram leading up to their public launch.

What caught my attention on that first call was the amount of trading they were already doing.

At the time, the team told me they’d processed around $7B in volume using roughly $2.5M of their own capital, all while operating in stealth.

I know how competitive this industry is. Getting that much flow with so little liquidity made me want to understand what they’d built.

Through those conversations and their subsequent write-ups, I started to get it. Metric has sort of been living rent free in my head ever since.

Metric had already passed roughly $22B in cumulative trading volume around its public launch. DeFiLlama now puts that figure above $23B, with current TVL around $11M. For much of its earlier life, the capital deployed was only a few million dollars.

Obviously, cumulative volume and today’s TVL measure different things. This doesn’t tell us what LPs earned or whether every pool is profitable.

But it does show that a relatively small amount of capital has supported a huge amount of trading.

A lot of those traders probably never knew they were using Metric. Their trades came through aggregators, which compare routes and send orders wherever they can get better execution.

That’s what initially got me interested. They were already competing for flow before most people knew they existed.

My understanding is that Metric is infrastructure for what it calls active pools.

The easiest way to understand this is to start with a problem regular AMMs have.

Say an asset trades at $100 in a pool, but its price elsewhere moves to $105. In a traditional AMM, the pool doesn’t automatically know that. Someone needs to trade against it to move its price.

Arbitrageurs do that, and LPs effectively pay for the correction.

Metric lets a pool use an outside reference price, such as an oracle or a market maker’s quotes. When that reference updates, the pool’s pricing moves with it.

The aim is to reduce how often LPs get picked off at an outdated price. If that works well, pools should be able to offer tighter prices while keeping more of the economics for LPs.

That’s a pretty meaningful improvement.

There’s another part of the design I think regular LPs will appreciate.

With concentrated liquidity, you choose a price range. The market moves away, your position goes out of range, and now you’re deciding whether to move it.

Metric organizes liquidity into bins set relative to the reference price. As the reference moves, those bins move with it.

So the range follows the market without you having to constantly reposition it yourself.

Let me show you what I mean. Below is the SPCX/USDG pool, curated by Carcosa:

Each bar represents a liquidity bin. The percentages along the bottom show its distance from the oracle’s reference price. Taller bars mean more liquidity sitting there.

If the reference price rises, the bins move up with it. They keep their percentage distance from that reference instead of being stuck at yesterday’s dollar price.

Choosing your bins is still important. Trades can move through them, and you earn a share of the spread when they use your liquidity.

You can also deposit a single asset, although trading can change the mix of assets you eventually withdraw.

None of this eliminates losses. The assets can still fall, pricing can fail and a strategy can perform badly. But I think it’s a useful change to how an LP position works.

Think of Metric as the “Morpho of DEXs”. I love this framing and a hat tip to Tom Wan for that. It immediately clicked for me. It’s shared infrastructure where teams can build their own pools and pricing strategies, and users can supply liquidity.

Tom also pointed out that Metric was already doing around “20% of Robinhood’s stock token DEX volume” when he posted shortly after launch. Pretty interesting for something most people hadn’t heard of yet.

Metric separates a few jobs that have often been bundled together:

A market maker can also run a private pool using its own capital and pricing.

The interesting part is that someone with a good pricing strategy doesn’t necessarily need to build an entire exchange, fund everything themselves and arrange every integration from scratch.

They can build on shared infrastructure, while other people provide the liquidity.

It reminded me a lot of Hyperliquid’s builder codes model. Where any savvy person can build on top of Hyperliquid’s world class infrastructure.

That’s why I think this is worth understanding as a new primitive. There could be a whole range of different strategies and businesses built around these pools.

When I first spoke to these guys, they were very excited about how their innovations worked with tokenized assets. This is actually part of what made me so bullish as I think our first call was in June and I believe I told them their timing could not have been better for all of this. Upgrading how tokenized assets trade just as they are hitting a tipping point onchain is skating where the puck is going.

But here’s a bit more on why this arrangement works so well for tokenized assets.

A tokenized stock already has a price in another market. The same goes for gold, currencies and plenty of other assets moving onchain.

It seems pretty sensible to let their pools reference that price directly.

If Metric can make those markets cheaper to trade and more attractive to provide liquidity to, that could become useful infrastructure as tokenization grows.

There’s already some very impressive early activity proving this is working. Metric says it processed $1.2B in volume in its first five days after public launch, with nearly $500M coming from tokenized stocks across BNB Chain and Robinhood Chain.

$1.2B in trading volume in 5 days on $11M of TVL is actually insane levels of capital efficiency.

What I’m watching is whether Metric can keep winning flow as more capital and competitors arrive. The early numbers are very impressive. If it can sustain this advantage or even grow it, these numbers could get bonkers!

If you want to track these Metric numbers, the best dashboard I’ve found is: https://deviation.wtf/

First off, if wanting to check up on Metric’s audits you can find them all here.

As I’ve stated, I’ve been impressed by the people I’ve spoken with on the Metric team. They’ve spent years in DeFi, and the design seems to come from dealing with the problems of being an LP themselves.

Metric has some protections around pricing and trades that could hurt LPs. I’m still getting my head around how they work, but they depend on how each pool is set up. I wouldn’t assume every pool has the same protections.

This sort of leads into the other thing I want to spend more time on which is the curator side. If Metric is the Morpho of DEXs, I think there could be an important risk layer here too. If you’ve followed Morpho I believe most, if not all, of their problems have come from the curator level. In this case, I think a similar thing applies, the infrastructure can work as intended and you can still lose money because of how someone runs a pool.

Carcosa is one of the most prominent curators on the platform and carries a verified badge. But I haven’t found much public information about who’s behind it or their track record. That’s something I’d like to understand better. Like, who are these guys?

Metric’s verification process includes identity checks, KYB and due diligence. However, unverified operators can also run public pools, and being verified doesn’t mean Metric endorses the strategy.

Before depositing, I’d want to understand:

Maybe all this stuff is posted clearly and I just haven’t looked hard enough.

I could see more established curators entering if running these pools becomes a profitable business. We shall see, it’s still very early days.

I like the infrastructure, but choosing who and what to LP with still deserves its own diligence. I think.

OK, why else am I excited here?

From my chats with the team, Metric has been self funded so far. I know this because I wanted to invest 😂. They haven’t raised outside capital, so there isn’t an existing VC round whose token allocation needs to be accounted for.

They could still raise, and we don’t know what the eventual token distribution will look like. But I think this gives them room to do a much larger community airdrop than most teams. There have been hints in that direction too 👀

I’m pretty confident a points campaign is coming. Actually, very confident. I also get the impression activity is already being tracked behind the scenes, although I haven’t seen that publicly confirmed.

They’ve also hinted that the METRIC token will be integral to the protocol. My takeaway from those conversations is that they want meaningful value flowing back to it. But that’s my interpretation, and I haven’t seen an official tokenomics document yet.

And yes, this is where I shill my referral link. There aren’t many floating around yet, and I’ve been told on good authority that using one should give both sides a points boost. I’m still waiting on the public details, but if you’re going to try Metric, please use mine:

The potential rewards are exciting, but so is the product itself. They’ve already attracted serious trading flow. If opening that infrastructure to public LPs works as advertised, I think there could be a big opportunity here.

My main way to participate will be through LPing. If I need to swap tokens, I’ll try to use their swap interface too, but LPing looks like the most hands off way for me to position for a potential METRIC airdrop. It still comes with the pool risks I mentioned above.

The last airdrop I remember being excited about was Kinetiq. This is pretty much the only one I’m taking seriously right now.

I could be way off here, and things can absolutely go wrong. But I’m interested enough to put my own time, energy and money into this. It’s something I’m trying to be early to myself.

7 day benchmark stablecoin rates from Portals: 2.99%:

Here’s the top yields on stablecoins (real yields) for the past 30 days:

7 day benchmark ETH staking rates from Portals: 2.25%

Here’s the top yields on ETH & BTC (real yields) for the past 30 days:

Here’s a snapshot of the front page of looping this week from yieldz.io (30d APY):

Taking a look at the front page of Stablecoin yields and RWA yields this week on Pendle:

Stablecoins

RWA

Thanks for reading!

DISCLAIMER: Nothing written in The Edge Newsletter or said on The Edge Podcast is a recommendation to buy or sell tokens or securities. This content is for educational and entertainment purposes only. Nothing shared here is financial advice. Any views expressed in our content are solely the opinion of that writer, host, or guest. Always do your own research. DeFi Dad, Nomatic, and guests may have positions in the assets or other matters discussed in this content.