It’s Time To Switch From DeFi To MetaFi!
Since 2018 in the crypto world, the term DeFi or Decentralized Finance has become the talk of the town. As the crypto space continues to grow, new crossovers such as “MetaFi” (the combination between “Metadata” and “DeFi”) are appearing and revolutionizing the tech sector. The first time it was introduced was in early 2022, by the cryptocurrency exchange, Binance. They claim that MetaFi is a new paradigm shift that standardizes blockchain technology for conventional Web2 large-scale applications, such as games, social media, and the metaverse. Additionally, by providing sophisticated and complicated DeFi Infra under the same roof, it can unite all blockchain-related applications, including Metaverse, GameFi, SocialFi, Web3 and NFTs. But could MetaFi really take the place of DeFi? Let’s find out in this article below!
1. What is MetaFi? The Structure of MetaFi
When first heard, the prefix “Meta” can be misunderstood to refer to the Metaverse; in reality, it is most closely related to metadata. Meanwhile, the suffix “Fi” comes from the term “Finance” in “DeFi”. In other words, MetaFi is a combination of the words Metadata and Finance. By standardizing DeFi information, this fundamental paradigm shift paves the road for interoperability.
As mentioned before, MetaFi will offer the innovative and all-encompassing DeFi Infra for different projects, ranging from Metaverse, GameFi, SocialFi, Web3, NFT and group them all under the name — MetaFi. This is possible by metadata that identifies ownership of the content. Besides, this metadata also allows MetaFi to integrate a variety of blockchain functionalities into a Meta ecosystem. MetaFi may feature a combination of fungible and non-fungible tokens along with community governance such as a Decentralized Autonomous Organization (DAO). Its goal is to create and steer a brand-new ecosystem based on defined metadata specifications.
Now, let’s take a closer look at the structure of MetaFi:
- Foundation: As the most important part of any MetaFi system, it contains the core frameworks, which would act as layer zero, one, and two solutions.
- DeFi: DeFi includes financial applications that use the common frameworks or protocols. It can be considered as financial legos that function as unstoppable programs that enable complex financial dynamics through the use of smart contracts.
- Verses: The metaverse is made up of verses, which are effectively a collection of parallel verses or domains. Based on compatibility and efficient value transmission, the various virtual worlds will be connected to the underpinning layers of verses.
2. How Does MetaFi Work?
MetaFi takes advantage of the presence of metadata for assets on most blockchains to improve interoperability. The NFT Metadata, for example, will frequently include a link to the associated image. A bitcoin (BTC) transaction can also include metadata, which allows you to enter additional information in the form of ciphertext.
Developing metadata standards that can be used on any blockchain will enable machine-readable and categorical assets. An NFT marketplace, for example, can understand and classify NFTs from multiple blockchains if their metadata is presented in the same format.
3. Top 4 MetaFi Use Cases
a. Virtual World
A virtual world is a digital environment used for social, professional, commercial, or gaming purposes that may or may not resemble the actual world. They frequently incorporate a component of scarce land represented as an NFT that can be freely acquired, exchanged, and developed when they depict the real world.
In this world, users can live a second life including playing or interacting with friends, coworkers,… For instance, Walmart has tried virtual shopping, in which users join the metaverse to buy goods and services. Other businesses also began to offer land that users could construct their dream homes, architectural marvels, or simply hang out with their friends.
The virtual world includes a variety of implementations such as NFT wearables, consumables, and so on, providing simple and straightforward NFT implementations into virtual reality.
b. Marketplace
MetaFi can be used by NFT marketplaces like OpenSea, Super Rare, etc. to offer all asset types, including virtual wearables, in-game items, NFT art, and real estate. By giving collector’s access to all NFTs through a single interface, this can improve their user experience and make asset exchange more convenient and effective.
c. NFT Yield Farming
With yield farming, users can utilize their idle NFTs as collateral or as assets to rent out for a profit. Renting expensive or precious NFT in-game items to players who couldn’t otherwise afford them is a common gaming strategy. Thus, yield farming NFTs work well with MetaFi.
d. Fan Token
In this situation, MetaFi can be an extremely useful tool for accelerating the creation and exchange of tokens. Whether they are fungible or non-fungible, these tokens can offer their owners a range of benefits, including VIP memberships, entry to exclusive events, voting power,… Sports teams or fan organizations frequently distribute supporter tokens to give fans access to special privileges. They are offered on various exchanges, including Chiliz, Binance, and Coinbase.
4. Final Thoughts: The Future of MetaFi
To conclude, MetaFi combines the best of the metaverse and DeFi. This concept is sure to spark a large number of MetaFi applications and new innovations in the cryptoverse, whether in the metaverse, gaming, or other fields. However, it would be a long time to wait for its full implementation and wide adoption.
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