The on-chain locked position surged, and "Layer2+DAO" helps Metis take off

Source: Hive Tech

Recently, the Metis application token METIS has stood out in the secondary market, rising against the trend of a downward movement in the BTC market. In the past 7 days, it has increased by approximately 167%, currently fluctuating around $195.

The rise in METIS prices has also brought attention to the Metis project, which is a Layer 2 scaling project based on Optimistic Rollup technology, aimed at helping Ethereum solve the problems of high GAS fees and on-chain transaction congestion.

Metis was created by a Canadian team, and its co-founder Elena Sinelnikova is also the founder of the blockchain non-profit organization Crypto Chicks, which is a women-focused organization dedicated to blockchain education, primarily providing opportunities for women to learn and enter the blockchain field.

Since another founder of Crypto Chicks, Natalia Ameline, is the mother of Ethereum founder Vitalik Buterin, some believe that Metis is a project backed by "V God’s" mother. Since the BSC on-chain game NFT project Radio Caca (RACA) claimed to have the support of Elon Musk's mother, Maye Musk, its token RACA has surged from around $0.003 in the secondary market to $0.011, an increase of about 3500%.

It seems that METIS token holders also hope that Metis can create a legend under the celebrity aura of "V God’s mother."

How long can the tenuous "celebrity effect" sustain the hype? Take Radio Caca's chain game as an example; after the hype subsided, the price of RACA in the secondary market has already fallen back to $0.003, returning to the initial point of the rise.

After the hype, how does the application position itself? These are hot topics of discussion among community users. Undoubtedly, whether a blockchain project can sustain development still relies on its own technological evolution and the capabilities of its development team.

Fortunately, data can still illustrate the situation for Metis. According to the Ethereum Layer 2 statistics website L2Beat, the total value locked (TVL) on the Metis chain has increased by 237% in the past 7 days, with assets locked on-chain valued at nearly $207 million, making Metis the Layer 2 scaling project with the highest increase in locked value currently.

Among many Layer 2 projects, why is it that only Metis stands out? What are the differences compared to other Layer 2 projects? How is the development of native applications on the Metis chain currently? This issue of DeFi Hive will help you sort it out.

Improving the Rollup Mechanism to Shorten the Time for Assets to Return from L2 to L1

Metis is built on Optimistic Rollup technology, which gives it the inherent advantages of this technology—low GAS fees and extremely high processing speed. Not only that, Metis has made technical improvements to address the delay issue when extracting assets from Optimistic Rollup Layer 2 to Layer 1. Some users have referred to this innovation as "Metis Rollup," which is why Metis is considered a fork of Optimistic Rollup.

To better understand the differences between Metis Rollup and Optimistic Rollup, let's first look at the working mechanism of Rollup.

The Ethereum Layer 2 Rollup scaling solution mainly migrates the most time-consuming and costly computation processes from the mainnet Layer 1 (L1) transactions to Layer 2 (L2). Smart contracts and DApps running on Ethereum can also operate on L2, thereby reducing the demand on the current Ethereum mainnet, increasing network throughput, and lowering transaction fee costs.

The specific operation process is that the Ethereum mainnet L1 only receives and records on-chain transaction data, with the mainnet ensuring data security, while actual computation and storage are executed off-chain on the Ethereum chain, i.e., on L2. The L2 network periodically packages the computation results of smart contracts and submits them in batches to the Ethereum mainnet L1.

For example, when a user submits a transaction to L1, the transaction data will be recorded there; the computation of that transaction is handled by the smart contract on L2, and then L2 packages the computation results in batches and sends them back to L1.

Different Rollup technologies have different handling schemes for the process of transmitting data from L2 to L1.

Optimistic Rollup L2 adopts a consensus mechanism of "fraud proof" when submitting data to the Ethereum mainnet L1—assuming that all submitting traders are good actors (unless proven guilty), the network believes that the vast majority of block validators are trustworthy, meaning that the data submitted from L2 to L1 is real. If there is a dispute, the entire L2 transaction needs to be moved to the L1 main chain, recalculated, and the results verified, which increases the time cost of calling contracts on the main chain.

Therefore, to ensure the security of transactions, when assets return from the Optimistic Rollup Layer 2 network to the Ethereum mainnet, there is a delay of 1-2 weeks.

Metis Rollup has improved the "transaction data verification section." It introduces "validators" during the computation process on L2, incentivizing verification nodes to quickly validate through a competitive mining mechanism, meaning that transactions on Metis L2 are verified by nodes.

This is similar to other POS mechanism L1 networks, where transactions are verified by nodes. Therefore, the data packaged and transmitted from Metis to L1 does not have dispute issues, and there is no delay in extracting assets from Metis to the Ethereum mainnet. Extracting assets from Metis to Ethereum L1 only takes a few hours or minutes, which is the biggest difference between Metis Rollup and Optimistic Rollup.

Currently, the main reason limiting the development of the Optimistic Rollup ecosystem is that it is not 100% compatible with EVM. This means that Ethereum DApp developers wanting to migrate their products to Optimistic Rollup may encounter issues with mismatched underlying code and network, requiring developers to change the underlying code of the application, leading to a significant investment of time and human resources, increasing the difficulty for developers. Although the Optimistic Rollup team has stated that they will work to improve this predicament, it has not been completely resolved.

Metis has seen the painful feedback from developers regarding these compatibility issues and has quickly improved its mechanism. It provides Ethereum developers with smart contract migration templates that are fully EVM equivalent. With Metis's smart contract templates, smart contracts or DApps originally deployed on the Ethereum network can migrate to Metis Layer 2 in minutes without any changes.

Establishing DAC Standards to Specify DAO Scenarios

Metis's goal is not only to reduce on-chain GAS fees and improve on-chain transaction processing efficiency but also to become the infrastructure of Layer 2, dedicated to the scalability and ease of construction of Layer 2 functionalities, allowing developers to use this infrastructure for the creation, management, and development of Decentralized Autonomous Companies (DACs).

Metis has proposed a new concept—DAC (Decentralized Autonomous Company), which is a specific application scenario of DAO.

While DAO focuses on voting and governance functions, DAC is specifically designed to address the daily operational and management issues of projects or enterprises, enabling anyone to build decentralized businesses on-chain that automatically execute pre-approved tasks based on predefined scopes and changes in events and conditions, allowing projects to operate like autonomous enterprises.

Additionally, with DAC tools, users can build functions that are completely analogous to business models in the real world, such as establishing procurement, operations, marketing, finance, and human resources departments. In short, it allows traditional companies to operate on-chain, enabling on-chain businesses to possess various functions of off-chain companies while enjoying the benefits of blockchain technology, such as information openness and transparency.

Through the DAC framework, Metis aims to build sustainable, decentralized companies on a high-performance underlying blockchain and provides users with preset tools, templates, and interfaces for forming DACs, allowing everyone to easily build and launch DAOs or DACs on-chain, running and managing their own communities, applications, and enterprises. Metis has also established a standard module for personnel in DACs or DAO organizations to measure their contributions within the DAO organization, such as work performance and wallet weight.

Currently, Metis DAC has empowered more application scenarios, allowing users to register and establish their own decentralized companies DAC, stake METIS tokens to earn liquidity rewards, and invite friends to join the DAC. The more participants in the DAC, the larger the scale, and the stronger the DAC's liquidity earning capacity, resulting in more METIS output.

Furthermore, Metis has opened cold start services for projects within the ecosystem, including everything from preparing initial funding to community building, marketing, and technical assistance.

DAC members can participate in mining new assets by staking METIS or participate in new asset launches, voting on whether to invest in these projects in exchange for their tokens. The computing power of the DAC will also determine the discount during token allocation. From fundraising, voting to governance, DAC has a more complete implementation plan.

Lack of Asset Entry Channels Hinders the Expansion of Metis Chain Applications

Since the launch of the Metis mainnet Andromeda in December, its native applications have attracted inflows of crypto assets.

Currently, users wanting to enter the Metis ecosystem need to first transfer METIS to the ecosystem, as it is the fuel for transactions on the Metis chain. Due to the lack of CEX support for direct METIS deposits into the Metis ecosystem, users must first bridge METIS to Ethereum and then recharge into the Metis ecosystem via the Metis Bridge.

Because the channels for crypto assets to enter Metis are not fully opened, users need to bridge assets multiple times to enter the ecosystem, undoubtedly increasing the barriers to use and limiting some traffic from entering the ecosystem. Currently, its on-chain applications are only present in the DEX scenario, and other products have not seen large-scale outbreaks. The main DEX applications on the Metis chain currently include the following two:

• DEX Decentralized Exchange Netswap

Netswap (NETT) is the first native decentralized trading application (DEX) deployed on the Metis network. It uses the same automated market-making (AMM) model as Uniswap. The difference is that Netswap benefits from the Metis Layer 2 network, resulting in lower transaction fees and faster transaction speeds.

Netswap has also adjusted its liquidity reward model, adopting a points system that divides liquidity contributions into two categories: one is trading contribution points, calculated based on the asset pairs and trading volume weight of user transactions; the other is liquidity contribution points, calculated based on the amount of LP funds provided by users and time weight. Liquidity rewards will be distributed based on the number of points users have to earn Netswap platform tokens NETT.

• DEX Tethys Finance

Tethys Finance is a recently created decentralized trading application on the Metis mainnet and is currently the DEX with the fastest growth in locked funds on this network.

Compared to previous DEXs, Tethys Finance has improved its product by visualizing user participation in projects and their funding situations on the Metis mainnet, allowing users to manage their assets more efficiently and helping them avoid idle assets during Farming, Staking, or forming LPs.

Currently, users can participate in liquidity mining to earn Tethys Finance platform tokens TETHYS rewards by providing LP funds for USDT-METIS, USDC-METIS, and others.

It is worth noting that Tethys Finance's official Twitter just started in November this year, and the security of this application still requires careful consideration from users.