What is MetaFi? Will MetaFi explode in the future?

1. What is MetaFi ?

MetaFi is a term that refers to the combination of Metadata and DeFi (Decentralized Finance) to enhance the interoperability of the BNB Chain, as mentioned in 2022. MetaFi represents a new model aimed at standardizing blockchain technology for traditional Web2 businesses in areas such as gaming, social media, and the metaverse.

MetaFi is a concept that provides advanced DeFi infrastructure by utilizing Metadata to determine content ownership for projects related to the metaverse, GameFi, SocialFi, Web3, and NFTs. Additionally, MetaFi can involve the combination of fungible tokens and non-fungible tokens (NFTs) along with a community governance system such as DAO (Decentralized Autonomous Organization).

The goal of MetaFi is to build and promote a new ecosystem based on the standardization of metadata while applying it to Web3 and blockchain technology. Furthermore, MetaFi is being developed with the aim of achieving mass adoption, offering users a wide range of use cases with cryptocurrencies and NFTs.

2. The operating mechanism of MetaFi

Leveraging metadata from the blockchain

One of the main foundations of MetaFi is the utilization of metadata from the blockchain. Most popular blockchains like Bitcoin and Ethereum store valuable information about different types of assets within the network.

For example, when users own an NFT, the associated metadata includes detailed information about the digital artwork, the creator, and the ownership history that is often linked to that NFT.

Additionally, Bitcoin users can also carry metadata, including unencrypted data. This feature has opened up new possibilities to enhance the functionality of the blockchain beyond simple asset transfers.

Interoperability and Standardization Capability

MetaFi is developed based on the idea of interoperability between different blockchains. To achieve this, MetaFi establishes general metadata standards that can be implemented across multiple blockchains. Imagine if all blockchains could display their metadata in a structured and uniform way. MetaFi would enable high compatibility among different blockchain ecosystems.

For example, an NFT marketplace operating within the MetaFi framework has the ability to seamlessly analyze and categorize NFTs from various blockchains. This means that users can view, interact with, and transact with NFTs from Ethereum, BNB Chain, and other blockchains within the same virtual environment, thanks to standardized metadata.

Machine-Readable and Organizable Assets

By adhering to these metadata standards, MetaFi ensures that assets such as coins/tokens and NFTs are machine-readable and organizable. This opens up exciting possibilities for automation and data-driven decision-making within the metaverse.

For example, a MetaFi-supported metaverse can automatically assess the risks and values of a diversified portfolio of assets spread across different blockchains. Additionally, information about different types of assets can be presented in a visually intuitive manner within the metaverse.

3. The necessary technologies for developing MetaFi

Blockchain Layer 1: Ethereum is a suitable choice for developing MetaFi to provide powerful smart contract capabilities and a large community. Additionally, BNB Chain is also an attractive option for MetaFi projects due to lower transaction fees and faster transaction confirmation.

Programming Language: Solidity is the most optimized programming language for creating smart contracts on Ethereum and other EVM-compatible blockchains.

Decentralized Identity (DID): DID standards are crucial for managing user identities and ensuring access rights to digital assets within MetaFi.

Oracle: Chainlink provides oracles that allow MetaFi applications to access and standardize real-world data.

Blockchain Layer 2: Layer 2 blockchains such as rollups and sidechains help improve scalability and reduce transaction costs to enhance user experience.

Interoperability Protocols: Polkadot’s interoperability capabilities enable MetaFi projects to connect with different blockchains and expand their reach. Additionally, Cosmos provides similar interoperability capabilities and promotes cross-chain communication.

JavaScript Development: Web3.js is a JavaScript library that facilitates interaction with Ethereum and EVM-compatible blockchains. Additionally, Ether.js is an alternative developer-friendly solution to Web3.js as it simplifies interactions with smart contracts.

Front-End Development: React is a popular front-end library for building user interfaces in MetaFi applications. Additionally, Vue.js is another choice for creating user interface experiences.

Back-End Development: Node.js is a suitable choice for building server-side applications and handling API requests. Additionally, Express.js is another option that simplifies back-end development.

Database Solutions: MongoDB is a commonly used NoSQL database for storing and managing user data. Additionally, PostgreSQL is a choice for structured data storage in MetaFi applications.

Security Tools: MythX is a security tool that identifies vulnerabilities in smart contracts. Additionally, OpenZeppelin is a library of tested smart contract patterns and tools for developers concerned with security.

Testing and Debugging Tools: Truffle is a tool that simplifies testing and deploying smart contracts. Additionally, Hardhat is a flexible development tool for Ethereum projects equipped with testing and debugging features.

4. Applications of MetaFi

Metaverse

The metaverse is a digital space where users can engage in various activities ranging from social interactions to transactions and gaming. However, the challenge lies in ensuring interoperability between these virtual worlds, similar to the initial difficulties faced by fragmented liquidity in decentralized exchanges (DEXs).

MetaFi can serve as a bridge to connect different metaverse ecosystems and enable seamless transfer of assets, social interactions, and rich experiences. Some notable metaverse projects include Decentraland, The Sandbox, My Neighbor Alice,…

GameFi

GameFi will greatly benefit from the interactive capabilities of MetaFi, allowing players to collect virtual assets, weapons, or currency in various games. Additionally, MetaFi enables players to seamlessly buy, sell, and trade their virtual assets across games or even marketplaces, creating a vibrant virtual economy.

Some notable GameFi titles include Axie Infinity, Sorare, Gods Unchained,…

Marketplace

A Marketplace supported by MetaFi that aggregates and lists various types of assets across multiple blockchains can be imagined. This would provide collectors and investors with a unified interface and simplify the exchange of NFTs and other digital assets.

The convenience and efficiency of such a Marketplace can open up new aspects in trading and asset ownership, avoiding the limitations of individual chains. Currently, some prominent NFT Marketplaces that allow users to trade NFTs across multiple blockchains are OpenSea, Blur, Rarible,…

Cross-chain

One of the most promising applications of MetaFi is its potential to bridge the liquidity gap between different DeFi platforms across multiple blockchains. Currently, the DeFi ecosystem operates independently, leading to fragmented liquidity and restricted trading. Therefore, MetaFi can create a standardized cross-chain bridge for various assets, enabling seamless trading of coins/tokens and NFTs across multiple blockchains.

Furthermore, this interoperability capability will enhance liquidity and reduce transaction costs for users. Some notable cross-chain bridges include Stargate Finance, Orbiter Finance, Bungee Exchange,…

Yield Farming NFT

wallets, users can leverage them to earn profits through staking or using them as collateral for borrowing coins/tokens. The functionality of NFTs can vary depending on the issuer. Some NFTs can be rented out for use in games or provide access to exclusive databases, thereby generating diverse income streams for asset owners.

Some notable Yield Farming NFT platforms include NFTX, NFTfi, BendDAO,…

Decentralized Identity – DID 

In the future with the support of MetaFi, blockchain-based identity verification can be standardized in a decentralized manner globally. As a result, users can securely manage their digital identities and easily verify them across multiple platforms and services. This has the potential to revolutionize online identity verification and reduce the need for performing KYC processes, thereby enhancing user privacy.

Whether accessing financial services or participating in the metaverse, individuals can rely on their MetaFi-linked digital identities for seamless interactions. Some identity projects that can be mentioned include Worldcoin, zkPass, Port3 Network,…

DAO

DAOs are organizations managed by smart contracts and token holders, and they can leverage MetaFi to enhance their governance processes. Standardized metadata and interoperable assets can facilitate easy management and voting on proposals related to various types of assets within DAOs. This can rationalize decision-making within these decentralized entities, making them more efficient and responsive to community members.

Fan token

Fan tokens are often associated with sports teams, celebrities, or brands that can greatly benefit from the standardization provided by MetaFi. Fan tokens can optimize the minting and trading processes of tokens by providing a consistent framework for transaction information.

Currently, the complexity and cost of setting up and trading fan tokens vary significantly across different blockchains, indirectly hindering widespread adoption. Some popular fan tokens include Chiliz (CHZ) – a blockchain that creates fan tokens, FC Barcelona Fan Token, Paris Saint-Germain Fan Token,…

5. MetaFi faces several challenges:

1. High technological requirements: MetaFi represents a comprehensive ecosystem based on metadata existing in the virtual world and comes with a set of requirements for both software and hardware. These requirements pose challenges not only for developers building MetaFi but also for users who want to interact with it.

2. Interoperability between blockchains: MetaFi encounters challenges arising from operating across different blockchains. The ability for DApps to interact within MetaFi requires accessing and transacting information across multiple platforms and blockchain networks. Each blockchain has its own ecosystem and cannot directly “communicate” with each other. This creates issues such as high transaction fees and low scalability. Therefore, research and improvements in Layer 1 blockchain technology are needed to make accessing DApps on each blockchain easier.

3. Sustainable tokenomics model: MetaFi requires a truly sustainable tokenomics model that provides users with stable benefits and long-term growth potential. A good tokenomics model will prevent major sell-offs due to significant decreases in APY from staking, farming, or airdrop rewards.
4. The concern regarding the governance model is an important issue in MetaFi. According to BNB Chain, the ideal governance model for MetaFi is to empower token holders with useful features such as voting rights and profit-sharing. This needs to be clear and transparent to protect all participants.

6. Future of MetaFi

identity management, giving users full control over their identities.

For example, Name Services like Ethereum Name Service (ENS), BNB Name Service (BNS), provide tools to address the issue of lengthy and complex wallet addresses. They allow you to send your tokens to a simpler wallet address like “vitalik.eth” instead of having to enter a long ERC-20 address.

To truly become a connected ecosystem, MetaFi requires high interoperability between blockchains. This can be achieved through multichain bridges that facilitate seamless data transmission and large-scale asset transfers.

MetaFi is a term that combines Metadata and DeFi, aiming to improve the interaction capabilities as mentioned by BNB Chain in 2022. MetaFi aims for mass adoption to provide users with various use cases involving cryptocurrencies and NFTs. However, it may take a considerable amount of time for widespread user adoption of MetaFi to occur.