Ethereum’s ever-high gas fees are troubling, but have also contributed to Layer 2, an imaginative track. Layer 2 may be the best alternative until Ethereum 2.0 is successfully implemented. At the beginning of 2022, Metis in the Layer 2 track is more eye-catching.

According to l2beat, as of January 15, the total locked volume of Metis, the Layer 2 expansion plan, has risen by 90% in the past 7 days, reaching US$469 million, surpassing Optimism and Loopring and ranking third in the Layer 2 locked volume ranking. Second only to Arbitrum and dYdX.

Interestingly, the founding team of Metis has a certain relationship with the non-profit organization Crypto Chicks, and Mother V God is one of the founders of the latter, which can not help but make people imagine. Of course, Metis’s current dazzling data performance may be more derived from its own mechanism design and technical capabilities.

The strict technical requirements of the expansion solution Layer 2 also increase the understanding cost of ordinary users accordingly. Therefore, this article attempts to comprehensively analyze Metis, a rising star of the Layer 2 track, in simple and easy-to-understand language. It is for reference only and does not constitute investment advice.

First, based on Optimistic Rollup, make certain improvements

Metis is based on Optimistic Rollup technology, which determines high speed (less than 1 second), low cost (less than 1 USD), and economic security at the level of Ethereum, which is its basic disk.

Of course, Optimistic itself has a major conundrum: the withdrawal of Layer 2 assets to Layer 1 (Ethereum mainnet) requires a 1 to 2 week exit cycle. The reason why Metis can quickly become a fan is that he solved this pain point of Optimistic.

Specifically, Metis optimizes the verification process of transaction data. By introducing validator nodes in the Layer 2 computing layer, Metis realizes a competitive mining mechanism, improves the work efficiency of validators, and at the same time ensures the real validity of transactions on the Metis chain. This enables the data transmission between Layer 2 and Layer 1 to be completely trustless, avoiding the problem of interval and delay in the transfer process. Therefore, it only takes hours or even minutes to withdraw assets from Metis to the Ethereum mainnet. This is also the core selling point of Metis to attract developers and users.

In addition, Metis takes the Optimistic one step ahead and achieves compatibility with the Ethereum virtual machine EVM. Developers can access a development environment with better experience within 10 minutes without changing the development language, which greatly reduces the cost of developers. switching costs.

Second, build your own Layer2 platform with MVM compatible with Ethereum

It is worth noting that the EVM-compatible Metis Virtual Machine (MVM) is a fork of the Optimism Virtual Machine (OVM) and mirrors OVM in function and code execution. However, Metis has optimized its design, and the most effective are the following three points:

1. Integrate IPFS to truly realize encrypted storage of data:

In order to avoid the storage cost on the Ethereum chain, Metis allows the data instances of its verification nodes to be stored in IPFS (Interplanetary File System). From this, users and developers can access content from Metis through MVM’s IPFS resolver, which brings two major benefits.

First, data can be encrypted within the Metis protocol, allowing users to store confidential information. Second, the IPFS parser enables Metis applications to directly access and link to stored data, such as the underlying data of artwork or music NFTs;

2. Improve the transition rate of Ethereum applications to Layer 2 through the middleware Polis

Unfamiliar programming languages ​​and development environments are the biggest obstacles to the migration of Ethereum Layer 1 to Layer 2. On the basis of being compatible with the Ethereum EVM, Metis provides developers with a “low-code-to-no-code” template for deploying and managing new applications with the help of the middleware Polis, thereby reducing the cost of using and learning new code for developers with one click . Polis is more suitable for code beginners, and often these young generation Z programmers are more passionate about crypto assets such as Bitcoin. In other words, Polis may be a drainage tool for the new generation of developers.

3. Added sorting pool mode and Metis Ranger system to enhance self-correction ability

Compared to other Layer 2 solutions, Metis focuses on enabling more robust network auto-correction capabilities to achieve the security and scalability required for long-term continuous operation. To this end, Metis created the sorting column pool mode and the Metis Ranger (user-participated node) system. The corresponding principle is that Metis randomly selects a new sequencer for each block and relies on a set of nodes (Rangers) to monitor sequencer activity. Stimulated by the incentive mechanism, users can act as verification nodes to discover fraudulent information and status on the chain to obtain corresponding token rewards.

In addition, these new validators are also allowed to start a new MVM execution environment to expand capacity as block space requirements increase, striving to achieve the so-called “infinite expansion” condition.

The superposition of these technical optimization schemes makes Metis more practical in many Layer 2 projects. Compared with the ZK Rollups scheme adopted by Loopring and Immutable X, Metis, which is highly compatible with the Ethereum EVM, is more attractive for on-chain applications; in addition, with the support of the IPFS data system, Metis can view on-chain applications in a decentralized manner. content, while Loopring and Immutable X cannot obtain the history of the entire blockchain and cannot guarantee the visibility of the blockchain. Therefore, Metis is also stronger than the ZK Rollups scheme in terms of data visibility.

The technical superiority of these theoretical conditions allowed Metis to receive US$5 million in financing as early as March 2021, when the bull market started, with investors including Waterdrop Capital, YBB Foundation and Consensus Labs. In addition, after May, the Metis token also rose all the way, and once exceeded $300.

But Metis’ ambitions may not stop there. He hopes to build a complete Layer 2 application ecosystem. Just on November 15 last year, Metis and its capital partners launched an incentive plan worth $100 million to attract high-quality projects to join. In addition, Metis has also successively cooperated with cross-chain applications such as cross-chain revenue optimizer Beefy Finance and cross-chain interoperability protocol Poly Network in order to obtain more cross-chain traffic.

Three, launch a specific DAO application scenario DAC, the head DEX becomes a double-edged sword for development

Combined with the popular concept of DAO, Metis, which is determined to become the underlying application facility of Layer 2, has launched a new concept of DAC (Decentralized Autonomous Company). Unlike DAO, which only has voting governance functions, DAC is more like a distributed business entity on the chain. It allows anyone to build a decentralized business on the chain and activate the entire ecological value through economic activities. According to its vision, Metis is equivalent to Tmall, and DAC is equivalent to thousands of sellers, with the former providing technical services for the latter. In addition, Metis will also play the role of an incubator, providing one-stop operational training and promotion and incubation services for DAC, thereby enhancing the liquidity of Metis.

Of course, DAC’s imagination is still in the long term, and it may not be good for the current value disk. In fact, a closer look shows that Metis’s impressive recent rise is likely to come from its generous incentive strategy.

On December 28 last year, Metis and the Layer 2 expansion agreement Celer Network announced the joint launch of the Metis Token liquidity mining plan to promote the integration of Celer and the Metis main network. Specific liquidity mining operations. Just two days later, Metis’s total lock-up volume exceeded $200 million.

In addition, the head DEX Netswap, which the Metis ecosystem relies on, also announced an airdrop of 1% of the total amount of tokens to early users around January 5, which has aroused a certain degree of heat in the market. As of January 1, its total lock-up volume has exceeded 100 million US dollars. It can be said that Netswap’s airdrop activity, coupled with the liquidity mining activity jointly launched with Celer, contributed to the bullish market for Metis in the short term.

However, the existence of Netswap is more of a double-edged sword for Metis. First of all, compared to other Layer 2 projects, the Metis ecosystem is still in its early stage, and its chain is not conducive to the birth of other well-known lending and NFT applications. Over-reliance on Netswap may have a “siphon” effect in the growth period, which is not conducive to the development of other projects. Second, since the Metis token can only be traded in a decentralized way on Netswap DEX, and the fees on the Metis chain are settled in Metis local currency, the convenience for developers is greatly reduced. You must know that developers can enjoy the network services of the NEAR public chain without exchanging ETH in their hands for NEAR; finally, Netswap has no obvious advantage over other leading DEXs, and lags significantly in terms of ecological scale. Therefore, Metis’s Layer2 ecological dream has a long way to go.

Although the growth rate of Metis transaction volume is astonishing, the total market value of Metis still has a gap with the top public chain. When large-value transactions occur, whether it can achieve the expected high speed and low cost is still not 100%. confirm. For developers, investors and ecological participants, time may tell everything.

FAQs

What is DeFi?

The first entry among the top DeFi interview questions would obviously point towards its definition. Decentralized finance is actually a financial ecosystem developed over the Ethereum blockchain network with various protocols and platforms. DeFi helps in easily moving around cryptocurrency tokens. At the same time, it also helps in trading, lending, and borrowing cryptocurrency tokens.

What does the future of DeFi look like?

As of now, there is no specific answer to this question, but the future looks bright for DeFi as it is slowly becoming mainstream. Technological advancement in the underlying infrastructure for DeFi is faster than ever with new innovative ideas popping up daily. 2021 looks like a great year for DeFi seeing the recent developments.

Is DeFi legal?

Yes, almost all DeFi projects or protocols need to abide by financial regulatory measures licenses to function regardless of whether they’re centralized or decentralized. Thanks to DeFi, financial watchdogs (e.g., the SEC) have started to notice the crypto space more than ever.

Is DeFi safe?

Yes, almost every protocol undergoes smart contract audits to ensure the codebase is secure and free from bugs and vulnerabilities. Majority of the popular protocols adopt strict security measures to ensure your crypto assets remain safe. Still, it’s advisable to conduct your due research before investing in any project.

Do I need some kind of cryptocurrency to participate in DeFi?

Yes, you would need cryptocurrency to participate in DeFi. Since Ethereum is the platform of choice, most DeFi projects’ tokens are based on the ERC-20 standard. Hence, it would be better for you to hold some ether for the sake of ease.

Do I need a crypto wallet for DeFi?

Yes, a digital wallet is a prerequisite for you to be able to dabble in the field of DeFi. There are several wallet options available for interacting with DeFi applications — MetaMask, WalletConnect, TrustWallet and Argent being the popular ones.

What are the important benefits of DeFi?

The primary objective of DeFi focuses on resolving the issues evident in traditional finance. Traditional finance depends on intermediaries such as banks. However, DeFi applications rely on code for specifying the resolution of any potential dispute. Subsequently, users have the ability to maintain comprehensive control over their funds. This can help in reducing costs related to use of financial services products to ensure a frictionless financial system.

The deployment of DeFi on blockchain takes away any specific point of failure, and data can be spread easily across various nodes. So, each node has copies of transactions carried out on the network. Therefore, it is difficult to impose censorship and a possible shutdown of service. The most significant benefit of DeFi points out to the improved accessibility of financial services for a broader audience.

How do DeFi applications work?

Another top mention among DeFi questions to ask in an interview definitely points out that it’s working. DeFi works through the development of dApps on a blockchain network like Ethereum and using smart contracts for automation. By using the two facets, DeFi applications could easily accommodate various financial services on a specific network. Presently, there are many notable examples of dApps tailored for lending automated loans known as crypto loans. Many apps related to DeFi also include the creation of stablecoins, investment options, asset exchange, and others available presently.

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