Since Ethereum ushered in the era of the smart contract blockchain in July 2015, the crypto industry has undergone a remarkable transformation. Since then, ETH and a new generation of layer-1 networks have slowly moved the cryptocurrency space away from a Bitcoin-maximalist philosophy. This quiet revolution culminated in 2020’s so-called “DeFi Summer,” when a plethora of new applications for digital assets was made possible by the advent of dApps. Since then, following the success of decentralized finance (DeFi), new sub-sectors have emerged, such as non-fungible tokens (NFTs) in 2021 and a race to dominate Web 3, GameFi, SocialFi, and now MetaFi in 2022.
MetaFi is a novel idea that can revolutionize the IT sector. As a result, many aspiring businesspeople are curious about MetaFi. This blog will define MetaFi, discuss its trajectory, detail its operation, and provide examples of its practical application.
Now, let’s get down to the meat of the post.
What is MetaFi?
MetaFi is an acronym that combines “meta” (which stands for “metadata”) and “Fi” (which stands for “DeFi”). To standardize blockchain technology for traditional Web2 large-scale applications like games, social media, and the Metaverse, a new paradigm shift known as MetaFi has been developed. This would result in a unified standard that promotes greater interoperability.
By consolidating diverse initiatives like the Metaverse, GameFi, SocialFi, Web3, and NFTs, the term “MetaFi” describes a system that supplies cutting-edge DeFi Infra to all of them. The metadata establishing property rights makes this a reality. MetaFi is an initiative to standardize the metadata used by different blockchains and platforms so that they can communicate with one another and share data. Decentralized autonomous organizations (DAOs) and community governance are examples of how MetaFi can combine fungible and non-fungible tokens (DAOs). MetaFi aspires to create and cultivate a new ecosystem centered on digital assets that facilitate widespread adoption of Web3 and blockchain technology and offer users and players novel applications. This ecosystem will be built on standardized metadata parameters.
When put together, these various crypto primitives make it possible for the blockchain to support a fully functional parallel ecosystem that caters to users worldwide. The term “MetaFi,” a portmanteau of “meta” and “Define,” aims to standardize metadata and other network technologies, such as NFT and game metadata, across networks.
Although many of these applications will be designed with the Metaverse in mind, the term “Meta” in this context can also mean “all-encompassing” or “a means to an end.”
What’s the deal with MetaFi?
Now that you know what MetaFi is let’s talk about how it operates. The improved interoperability made possible by the availability of Metadata for Blockchain assets is beneficial to MetaFi. In the case of NFT, for instance, the file’s metadata will feature a reference to a visually-similar image. Users can enter metadata in plaintext and then link to the corresponding Bitcoin (BTC) transaction.
With the aid of metadata standards, assets in MetaFi will be searchable, machine-readable, and applicable to any Blockchain. Each blockchain will need an integrated metadata standard to display its mutually compatible metadata. At this point, for instance, a market for NFTs could begin classifying and labeling NFTs issued on various Blockchains. Interoperable, secure, and robust projects can be achieved when Blockchains adopt relevant metadata standards.
What Makes MetaFi so Popular?
Let’s analyze the factors that have contributed to MetaFi’s success.
MetaFi can track the value and flow of digital assets in the open market. Establishing new procedures for calculating real-time discovery prices paves the way for unearthing previously unrecognized value. Researchers in the field of cryptography have found ways to exploit the device’s complexity. At the same time, NFT platforms are establishing the monetary framework for user-community exchanges of art and services. NFT creators can access eternal tokens by using their social tokens.
MetaFi implementation relies heavily on DAO and other forms of mature governance. Consumers have had access to DeFi’s community-based insurance plans through DAOs.
Future applications based on MetaFi may be made possible by the rise of play-to-earn games and other methods of data monetization.
Uses for MetaFi
This new term, “MetaFi,” refers to a decentralized financial platform for the Metaverse. However, many MetaFi applications may already be fully functional and helpful in Metaverse, as was mentioned above. As a result, MetaFi’s potential advantages are practically boundless, and they extend far beyond the ones listed above.
MetaFi in the Virtual worlds
The term “virtual world” refers to an online platform designed to simulate various real-world activities, such as socializing, working, and shopping; it’s possible the physics won’t be the same as in the original world. While NFTs are often used to represent the real world, they do not exclude the issue of scarce land. So that they can shop, sell, and construct without hindrance. Projects like Sandbox clone and Decentraland are prominent examples of such platforms.
The virtual world is where you’ll spend most of your time, whether it’s playing, constructing, or gathering with friends and coworkers. The implementation of blockchain technology in MMORPGs has advanced slightly since the beginning of 2021. A dozen or so people used to participate regularly. Therefore, virtual worlds provide various implementations, including wearable NFTs, consumables, etc., and present effortless ways to incorporate NFTs into the virtual reality experience.
Yield Farming NFTs
NFTs are increasingly being used as collateral for loans, with the borrowed money being invested at higher prices to generate yield. Specialized NFTs can be staked for returns or rented out to anyone else who wants to use them. If a player is unable to purchase a particularly valuable or expensive NFT item, they have the option to rent it instead. In this scenario, the owner receives either a percentage of the rent collected from tenants or a set monthly fee in exchange for using their NFTs.
There is currently a plethora of NFT marketplaces to choose from, to name just a few: Rarible, Nifty Gateway, LooksRare, and OpenSea. These networks are distributed and, depending on the blockchain, may provide a selection of non-fungible tokens. Digital works of art, virtual clothing, domain names, musical compositions, virtual properties, and much more are just some of the NFTs available to cryptocurrency fans. To regulate ownership, NFTs are categorized as financial assets.
MetaFi’s mission is to assist marketplaces in growing to the point where they can list every conceivable asset type across all chains. To put it another way, this will improve the user experience and streamline the process of buying, selling, and making NFTs for everyone involved.
Users of Binance and Coinbase will be familiar with the concept of “fan tokens.” These come in fungible and non-fungible varieties and grant their holders a wide range of privileges such as entry to restricted areas, membership in exclusive communities, and even voting in elections. These tokens can be minted and traded on the market.
Future of MetaFi
While MetaFi’s long-term viability is still up in the air, some good use cases have emerged in the meantime. To facilitate user access to their digital assets and identities, MetaFi will make use of a decentralized identity management system.
The complexity of addresses can be reduced with the aid of naming services. These services will assist in reducing the effects of human error. Instead of using a lengthy Ethereum address, users can send tokens to a brief speech.
This is why metaverse projects are currently being developed to bridge the gap between the online and offline worlds.
While the MetaFi concept is still unfamiliar to many companies, its successful implementation holds great promise for the future. While waiting for MetaFi to present opportunities, businesses can take advantage of the Metaverse, which bridges the gap between the virtual and physical worlds to facilitate communication, collaboration, and innovation. Suffescom Solutions Inc. is a resource for those looking to collaborate with a leading Metaverse development company. They have a team of seasoned programmers who can help you with anything you need during your Metaverse development project, so you can rest assured that hiring them is a good idea.