What is MetaFi?
MetaFi is a compound word of two words – Meta (for Metadata, not Metaverse) and Fi (for DeFi – Decentralized Finance). The concept was first introduced by the cryptocurrency exchange, Binance, in early 2022. According to them, “MetaFi is a new model that aims to standardize blockchain technology for traditional Web2 large-scale applications, including games, social media, and the metaverse.” This would develop a unifying standard that aids in improving interoperability.
Besides, MetaFi is a concept that is providing modern and sophisticated DeFi Infrastructure for various types of projects like Metaverse, GameFi, SocialFi, Web3, NFT and putting them under a common name of MetaFi. The combination of these different cryptocurrencies has created a fully parallel ecosystem serving users from all over the world via blockchain.
The idea of MetaFi is to aim to implement a wide range of blockchain functions into a Meta ecosystem, which is interoperable thanks to defined metadata standards used across variant platforms and blockchains. MetaFi may include a combination of fungible and non-fungible tokens along with community governance such as a Decentralized Autonomous Organization (DAO). The goal is to build and foster a new ecosystem, built on standardized metadata parameters, based around digital assets that empower mass adoption in Web3 and blockchain technology.
The various use cases of MetaFi
Marketplaces
By the use of MetaFi, we can possibly have a marketplace that lists every single asset type that can exist in multiple chains. There is no doubt about the chance to boost the user experience for collectors or users. MetaFi also allows them to access all NFTs in a single interface asset as well as to exchange more conveniently and efficiently.
Fan Tokens
Currently, the technique and cost of establishing and exchanging them is different on every blockchain platform. When the standard information for different kinds of tokens and platforms is in place, MetaFi will streamline the process of minting, buying, and trading fan tokens.
NFT Yield Farming
Now, you can put your NFT to work as collateral for crypto loans, allowing you to renew the lent assets at a greater rate, earning your money. Depending on the issuer, the functionality of these NFTs may differ. Some NFTs, for example, can be rented out to others for use in games or access to special databases that they could not otherwise purchase.
What is MetaFi’s current challenges and limitations?
Firstly, because MetaFi is a comprehensive ecosystem based on metadata, which is often placed in virtual reality, it comes with a wide range of requirements for both software and hardware. These requirements pose a challenge not only for MetaFi builders to develop but also for users and players to interact with it.
Secondly, the ongoing development of GameFi and DeFi highlights the growing demand for sustainable tokenomics as well. This also requires MetaFi to be able to provide users with significantly more stability and reliability on an ongoing basis, enabling long-term growth. Another requirement is to discourage large sell-offs due to an unusual drop in APY (Annual percentage yield) or incentive rewards.
And last but not least, focusing on the legal side of things. This will ideally empower token holders with useful features such as voting rights and profit income. This needs to be clear and transparent to protect all participants.
Conclusion
s6k Labs hopes this information could help the question “What is MetaFi?” no longer exists in your head. MetaFi is a relatively new yet futuristic concept with the goal to bring several Web3 aspects into the real world in a friendly way for anyone. Moreover, it has the potential to reconstruct commerce and trading by incorporating it in the metaverse, so that users can trade and make transactions in real-time endlessly.
The concept of MetaFi remains new to many citizens and the technological development of the metaverse is still under scrutiny. But on the other hand, if implemented properly, MetaFi will bring wide potential interaction into the metaverse.