There is no single definition for MetaFi, but there are two versions of it. The meaning of each is different, but they agree on one thing — this is a concept that involves the integration of DeFi infrastructure and all types of projects on the blockchain into one metaverse: GameFi, SocialFi, Web3 and NFT.
Some believe that these are metadata and DeFi, others that these are decentralized financial tools of the metaverse. In the article we analyze each of the versions separately.
Metadata + DeFi
The term itself consists of two parts: “meta” — metadata and “fi” — DeFi. The main goal of MetaFi is to create a new ecosystem of blockchain projects that will be based on metadata.
What is DeFi
Decentralized finance (DeFi) is a part of the blockchain industry that creates analogues of traditional banking tools using cryptocurrencies and blockchain technologies. It includes decentralized applications (DApps) and tokens that are used in them.
In MetaFi, decentralized finance will help develop sustainable tokenomics. Decentralized identity and reputation management systems, which are already working in DeFi, will also play a big role. Through such systems, users will have a digital ID. But it is still unknown what bonuses the digital ID and its reputation will bring.
The word “meta” in the term MetaFi is used as metadata, not part of the word “metaverse”. Although some of the applications of this ecosystem will be used in metaverses.
What is metadata
Metadata is data about data. For example, in NFT, these are the name, description, properties, levels, and characteristics. And for a bitcoin transaction, the metadata will be the wallet address, cost, and time of the transaction.
The idea behind MetaFi is to link all projects on the blockchain into one ecosystem using a single metadata standard. It must be used in all blockchain technologies: cryptocurrencies, NFTs, GameFi, DeFi, DAO.
Thanks to metadata standards, assets will be easily readable and sortable. They can be used on any blockchain. For example, if metadata in blockchains support one standard, then one NFT marketplace can contain NFTs from all blockchains.
But such a metadata standard will not work without the infrastructure of cross-chain bridges. It is a set of tools for creating links between blockchains. In such a bridge, smart contracts freeze and issue tokens, oracles monitor price matching, and nodes perform validation. As a result, assets are frozen in one blockchain, and their copies are released in another. All cross-chain bridges approach the implementation of this solution differently, but the described principle remains the same.
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There is already an example of this approach — the MetaFi project. This is a launchpad that focuses on GameFi, NFT, and Metaverses.
What is launchpad
Launchpad is a platform where crypto startups raise funds for further development and launch.
In Q4 2022, the MetaFi team is planning to launch two products:
- Metaverse bank is a platform for NFT transactions from different projects. Its users will be able to buy, sell, rent, store and stake their tokens. The platform will work with cross-chain bridges, just like the entire MetaFi project ecosystem;
- Guilt agregator is a platform where users can search for and interact with different Play-to-Earn guilds through a single interface. Cross-chain bridges will also be used here.
Metaverse + DeFi
According to another version, MetaFi are decentralized financial tools of the metaverse. That is, there is no one technology that will help to combine all projects in the metaverse.
But this version of MetaFi has its own trends that will help speed up the process of creating one metaverse and attracting a large number of users to it. They will be most visible in MetaFi’s core areas of activity, such as virtual worlds, games, avatars, and NFT marketplaces. There are 4 such trends:
- the development of financial tools. With the help of NFT marketplaces, creators and communities will get new trading opportunities, from paying perpetual royalties to issuing their own social tokens;
- the mutual distribution of risks. The DeFi ecosystem provides user communities with insurance services;
- the improvement of DAO services. Provides the ability to collectively manage the delivery of digital and financial services without centralized intermediaries such as banks;
- the gamification of finance. Introduction of game mechanics into financial transactions.
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MetaFi is a term for protocols, products, and services that enable complex financial interactions between NFTs, conventional tokens, and blockchain projects. For example, with MetaFi, an individual can use part of the NFT as collateral on a DeFi lending platform.
The Next Earth project can be considered an example of this version of MetaFi. This is a virtual land ownership platform on the Polygon blockchain, which allows you to earn income from your activities. It simultaneously works with the OpenSea NFT marketplace, the Uniswap decentralized exchange and the Chainlink system, that tracks the value of assets. Here, DeFi adds to the gaming activities the possibility of earning, farming and staking of the native NXTT token.
In the article, we talked about two versions of what MetaFi is. The first one focuses on metadata, and the second one focuses on decentralized finance. They also agree on one thing — this is the unification of the DeFi infrastructure and all types of projects on the blockchain: GameFi, SocialFi, Web3 and NFT.
In the first version, MetaFi means combining metadata and DeFi. The main goal of this version is to create and develop a new ecosystem of blockchain projects based on metadata. To improve interactions between blockchains, MetaFi uses metadata. The use of standardized blockchain metadata makes assets easily readable and sortable across different blockchains.
In the second version, MetaFi are decentralized financial tools of the metaverse. Such projects focus on trends that will help speed up the process of creating one metaverse. These are the development of financial tools, the mutual distribution of risks, the improvement of DAO services and the gamification of finance.
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