Traffic entry business with an annual income of hundreds of millions of dollars
Metamask transaction fee business model analysis
Consensys’ April report showed that Metamask’s monthly active users gained 5 million. This shows that for new users, Metamask is indeed the gateway or first choice to enter the decentralized economy. It is worth noting that the monthly life of Metamask in October last year exceeded 1 million.
The reason why the data reached 1 million in October is largely due to the enthusiasm of DeFi. The increase from 1 million users to the current 5 million is mainly due to the NFT wave, which attracted a large number of mainstream users to Ethereum .
According to the Consensys report, Swap is the most frequently used feature of Metamask users, and linking wallets to purchase NFTs is now the second most popular usage scenario for Metamask. Metamask launched the Swap function (October 2020) in the same month when its monthly activity exceeded 1 million. At the same time, the transaction volume also surged to 13 billion U.S. dollars).
The aggregator of Metamask Swap aggregator. Metamask integrates different sources of liquidity, not limited to professional market makers, but also aggregators such as DEX such as Uniswap , 1inch and Matcha. Therefore, every time the user uses the Swap function, he can get the best offer of the target token.
For many users who trade every day, Metamask is a very convenient application. Moreover, users are also willing to pay for it. For Consensys, a supporter behind Metamask, the Metamask Swap function is a money printing machine.
In other words, Metamask’s official website information shows that “each quotation automatically includes 0.875% of the service fee.” If the service fee is calculated from the beginning of the year, based on the transaction volume generated in 2021, Metamask has made a profit of 100 million US dollars as of a few weeks ago.
What does a $100 million profit mean in the DeFi world?
Strictly speaking, many DeFi agreements are still in the stage of doing public welfare (the agreement has zero benefits). For example, Uniswap generally charges a 0.3% transaction fee, but all the proceeds are used to make the market, that is, to provide liquidity. On the other hand, Sushiswap and Curve also want to try to bring benefits to token holders by setting up different fee structures.
For example, Sushiswap allocates 0.25% to liquidity providers, and 0.05% of the total transaction volume is distributed to SUSHI token holders as revenue. Curve also charges a 0.04% fee for each transaction, of which 1/2 is allocated to the liquidity provider, and the remaining 1/2 is allocated to the CRV pledger.
And Metamask does not need to care about liquidity providers, because its liquidity source is different from ordinary DEX. Therefore, for every $1,000 of transaction volume, Metamask will earn $8.75, SUSHI pledgers will earn $0.5, and CRV pledgers will earn $0.2. To put it simply, the revenue for each dollar of transaction volume generated on Metamask is 17 times and 44 times that of Shshiswap and Curve. Therefore, although Metamask’s transaction volume is several times lower than Sushiswap or Curve, it is the largest money printing machine among the three companies.
Why is there such a large pricing power?
As one of the safest and easiest ways to participate in the decentralized economy, Metamask attracts users from all over the world. Users do not need to pay for the use of functions other than Metamask Swap. For users who do not like to use the Swap function, it also supports direct and seamless connection to common liquidity sources such as Uniswap, avoiding the 0.875% fee.
In fact, most Metamask users do not use the Swap function at all. However, what is amazing is that Metamask has created $100 million in revenue when less than 2% of active users execute transactions through Metamask swap.
In addition, there is a lack of competition in the browser wallet field. Even if there are many entrants in this field, it is difficult to get rid of homogeneity and win the trust of a large user base. However, considering the super revenue record set by Metamask, we will expect market forces to attract more competitors who may challenge the dominance of the number one browser wallet.
Currently, end users have a complete link to execute transactions. Aggregator of Aggregator -> Aggregator -> DEX
There are several different paths for future development.
One is that these vertical industries focus on their respective tracks and try to monetize their positions, increasing the cost of Web3.0 users.
Or, we may see direct competition between agreements in these verticals. For example, 1inch started as an aggregator, but later launched their own DEX-Mooniswap, and 1inch wallet.
In addition to Metamask, Consensys is also responsible for Airswap. If the Web3.0 industry develops the same business model as Web2.0, that is, large groups protect their position in each vertical field at the expense of users, it will undoubtedly be disappointing. Of course, there is currently no indication that this will happen. For example, even if Consensys is responsible for two projects at the same time, it still maintains a fairer attitude and fair business model-compared to other sources of liquidity, Metamask Swap does not have “special care” or resource tilt Airswap.
All in all, Metamask has just begun to reap the benefits of a seemingly sustainable economic moat. Considering its unique position, Metamask has no real competitors. In the foreseeable future, Metamask may still be one of the largest cash printing machines in the Web 3.0 field.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/a-traffic-entry-business-with-an-annual-income-of-hundreds-of-millions-of-dollars-metamask/
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