What is MetaFi?
MetaFi is the combination of metadata and DeFi, which represents a new paradigm aiming to standardize blockchain technology for traditional Web2 large-scale applications, including games, social media, and the metaverse.
MetaFi provides advanced DeFi infrastructure using metadata to define ownership of assets for projects such as GameFi, SocialFi, Web3 and NFTs. MetaFi can also include a mix of fungible-tokens and NFTs (non-fungible tokens) coupled with a community governance system like DAO.
MetaFi aims to build and promote a new ecosystem built on standardized metadata parameters. MetaFi also focuses on digital assets that grant mass adoption in Web3 and blockchain technology, thereby providing users with new cases of crypto and NFTs.
How it work
Take advantage of metadata from blockchain
Most popular blockchains such as Bitcoin and Ethereum store data about assets in the network. For example, an NFT’s metadata will generally contain a link to the associated image. You can also add metadata to a bitcoin (BTC) transaction, allowing you to input extra information as plaintext.
Interoperability and standardization
MetaFi was developed based on the idea of enabling interoperability between different blockchains. MetaFi’s goal is to integrate a wide range of blockchain functions into a single Meta ecosystem, which will be interoperable due to metadata standards used across many platforms and blockchains.
Machine-readable and sortable assets
Assets will be machine-readable and sortable if metadata standards are created that are usable on any blockchain. This opens up exciting possibilities for automation and data-driven decision making in the metaverse.
Technologies needed to develop MetaFi
Layer 1 Blockchain
Ethereum is the best choice for MetaFi development, which can provide strong smart contract capabilities and a large community. BNB Chain is also a good choice for MetaFi projects because it offers lower transaction fees and faster transaction verification.
Programming language
Solidity is the most optimal programming language that can be chosen to create smart contracts on Ethereum and other EVM compatible blockchains.
Decentralized Identity – DID
DID standards are important in managing user identities and ensuring access to digital assets in MetaFi.
Oracle
Chainlink provides oracles that enable MetaFi applications to access and standardize real-world data.
Layer 2 Blockchain
Layer 2 blockchains such as rollup and sidechain help improve scalability and reduce transaction costs, thereby improving user experience.
Protocols improve interoperability
Polkadot’s interoperability allows MetaFi projects to connect with other blockchains and expand their reach. Besides, Cosmos provides similar interoperability and promotes cross-chain communication.
JavaScript
Web3.js is a JavaScript library that allows interaction with blockchains, Ethereum and EVM. Ether.js is also a more developer-friendly alternative to Web3.js as it simplifies interactions with smart contracts.
Front-End
React is a popular front-end library for building user interfaces in MetaFi applications. Vue.js is also another option for creating user interfaces.
Back-End
Node.js is a very suitable choice for building server-side applications and handling API requests. Express.js is also another option that simplifies back-end development.
Database solution
MongoDB is a NoSQL database commonly used to store and manage user data. PostgreSQL is also an option for storing structured data in MetaFi applications.
Security tool
MythX is a security tool that identifies vulnerabilities for smart contracts.
Testing and debugging tools
Truffle is a tool that simplifies testing and deployment of smart contracts. Hardhat is also a flexible development tool for Ethereum projects equipped with testing and debugging features.
Applications of MetaFi
Metaverse
The Metaverse is a digital space where users can engage in a variety of activities from socializing to trading and gaming. However, the challenge is how to ensure interoperability between these virtual worlds. MetaFi can serve as a bridge to connect different metaverse ecosystems and enable seamless asset transfer, social interaction, and rich experiences.
GameFi
MetaFi’s interoperability will help players collect virtual assets, weapons or rewards in different games. MetaFi also allows players to buy, sell and trade their virtual assets seamlessly between games or even the marketplace, creating a vibrant virtual economy.
Marketplace
Imagine a marketplace powered by MetaFi that aggregates and lists every type of asset across multiple blockchains. This will provide collectors, investors with a unified interface while simplifying the exchange of NFTs and other digital assets. Some prominent NFT Marketplaces that allow users to trade NFTs on multiple blockchains are OpenSea, Blur, Rarible, etc.
Cross-chain
One of the most promising applications of MetaFi is its potential to bridge the liquidity gap between DeFi platforms on various blockchains. The DeFi ecosystem operates independently leading to fragmented liquidity and limited transactions. Therefore, MetaFi can create a standardized cross-chain bridge for asset types, and users can trade coins/tokens, NFTs seamlessly across different blockchains.
Yield Farming NFT
MetaFi introduces a new concept called Yield Farming NFT. Instead of storing NFTs in wallets, users can leverage them to earn profits by staking or as collateral for coin/token loans. Some NFTs can be rented for in-game use or access to exclusive databases, thereby generating more profits for asset owners.
Decentralized Identity – DID
In the future with the support of MetaFi, blockchain-based authentication information can be standardized in a decentralized manner globally. As a result, users can securely manage their digital identities and easily verify them across various platforms and services. This could revolutionize online identity verification and reduce KYC processes to enhance user privacy.
DAO
DAO are organizations governed by smart contracts and token holders, which can leverage MetaFi to enhance their governance processes. Standardized metadata and interoperable assets will make it easier for DAOs to manage and vote on proposals related to various asset types.
Fan tokens
Fan tokens can be optimized for minting and trading tokens by providing a consistent framework for transaction information.
Challenges of MetaFi
Technologies
MetaFi represents a completely metadata-based ecosystem that exists in the virtual world and comes with a set of requirements for both software and hardware. These requirements pose challenges not only for the developers building MetaFi but also for users who want to engage with it.
Interoperability between blockchains
MetaFi faces challenges arising from operating on different blockchains. Interoperability of DApps in MetaFi requires the ability to access and transact information across various blockchain platforms and networks.
Each blockchain has its own ecosystem and cannot “communicate” directly with each other. This creates problems such as dealing with high transaction fees and low scalability. Therefore, it is necessary to conduct research and improve Layer 1 blockchain technology to make accessing DApps on each blockchain easier.
Sustainable tokenomics model
MetaFi requires a truly sustainable tokenomics model while providing users with stable benefits and long-term growth. A good tokenomics model will prevent large sell-offs due to sharp drops in APY from staking, farming, or airdrops.
The future of MetaFi
The future of MetaFi is yet to unfold, but there are a few use cases such as decentralized identity management that gives users the power to manage their identities. However, these are all still in their infancy stage.
If we want MetaFi to be truly meta, BNB Chain needs to develop several standards across various blockchains, be it layer 0 or layer 1 networks, as at the moment, most of them are not 100% interoperable. None of this will be possible without stable and interoperable projects developed with multi-chain functionality and bridges that will facilitate the enormous volume of asset and data transfers.