MetaFi: What is it all about ? Exploring the Metaverse: A Deep Dive into MetaFi

MetaFi — How changes your way of trade in the present Tech industry?

MetaFi is the amalgamation of two words – Metadata and DeFi. Metadata is a set of data describing and giving information about other data. For instance, the photos captured on the phone will have metadata or information such as date, resolution details etc. Likewise, every blockchain transaction will have metadata.

MetaFi comes from Metaverse and Decentralized Finance. New technologies will converge and act as a catalyst which speeds up the world’s paradigm shifts.

The concept MetaFi was first introduced by the cryptocurrency exchange, Binance, in early 2022. According to them, “MetaFi is a new paradigm shift 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.

It is a concept that unifies all blockchain-related projects, such as Metaverse, GameFi, SocialFi, Web3 and NFTs, by offering advanced and complex DeFi Infra under one roof. MetaFi makes this feasible by the metadata that defines asset ownership.

DeFi will unlock value in Metaverse and it will be a reciprocal connection in which both technologies will progress faster and bring more users in. The term MetaFi refers to the Decentraliszed Finance tools in the Metaverse.

Any kind of product, protocol or service that helps the financial interaction between NFTs and fungible tokens can be considered MetaFi.

To understand MetaFi in detail, we need to know about DeFi and the Metaverse. So in this article we will cover:

• What is DeFi?

• Benefits of DeFi

• Risks of DeFi

• How does MetaFi work?

• What is Metaverse?

• Metaverse Framwork?

• The Main components of Metaverse

• Structure of MetaFi

• How does Metaverse integrate MetaFi?

• Finance in Metaverse

• Envision a MetaFi

• How does Metaverse benefit from MetaFi?

• Advantages of MetaFi

• How can we accelerate the MetaFi progress?

• Limitations of MetaFi

What is DeFi?

DeFi, or Decentralized Finance, is an emerging financial technology that eradicates the need for third-party control like banks over financial services and products. It overcomes the shortcomings of traditional finance by promoting financial liberty to users, eliminating fees charged by intermediaries and allowing faster transactions within seconds.

Decentralized finance (DeFi) came into prominence with the introduction of Ethereum and its self-executing smart contracts. Facilitating peer-to-peer transactions and exchanges enables people to:

• Lend and borrow assets

• Trade cryptocurrencies

• Earn high interests

• Insure against risks

Being built on blockchain technology, DeFi offers an entirely decentralized, permissionless, open-source and transparent financial ecosystem. Some of the use cases of DeFi include,

• Gaming

• Asset management

• Lending and borrowing

• Data and analytics

• Insurance

• Exchanges and marketplaces

Benefits of DeFi ?

DeFi offers several benefits over traditional finance. It provides financial inclusivity, allowing anyone with an internet connection to access financial services.

Also it offers transparency, as all transactions are recorded on a public blockchain. Additionally, DeFi platforms often provide higher yields than traditional banks.

1. Accessibility: Democratizing Finance

DeFi opens the doors to financial services to anyone with an internet connection.

Unlike traditional banking systems, where access might be restricted by location, wealth, or status, DeFi platforms are accessible to anyone, regardless of where they live or their financial standing.

This democratization of finance helps in bridging the gap between the privileged and the underprivileged, making financial tools available to all.

2. Security: Enhanced Protection through Decentralization

DeFi’s decentralized nature means that there is no single point of failure. Traditional financial systems rely on centralized entities, which can be vulnerable to hacks and fraud.

In contrast, DeFi uses blockchain technology to distribute data across a network of computers, enhancing security and reducing the risk of single-point failures.

3. Transparency: Open and Verifiable

All transactions on a DeFi platform are recorded on a public ledger, providing complete transparency. Anyone can verify the transactions, ensuring that there’s no hidden manipulation or fraudulent activity.

This transparency builds trust among users and ensures that the system operates with integrity.

4. Interoperability: Seamless Integration

DeFi platforms are often built on open standards and can easily interact with one another.

This interoperability allows users to move their assets between different DeFi services effortlessly, creating a more integrated and efficient financial ecosystem. It fosters innovation and enables the creation of more complex financial products.

5. Ownership and Control: Your Assets, Your Rules

In DeFi, users have complete control over their assets. Unlike traditional banks where your money is held by a third party, DeFi allows you to have full ownership of your cryptocurrencies and other digital assets.

This means you have the freedom to use them as you wish without the need for intermediaries or the risk of unauthorized access.

6. Cost Efficiency: Lower Fees and Better Rates

DeFi often offers more competitive interest rates and lower fees compared to traditional financial services.

By cutting out middlemen and leveraging smart contracts, DeFi can provide services like lending and borrowing at a fraction of the cost.

This cost efficiency is not only beneficial to individual users but also promotes a more inclusive and equitable financial landscape.

7. Innovation: A Breeding Ground for New Financial Products

The open-source nature of DeFi encourages innovation and the development of new financial products and services.

From yield farming to decentralized exchanges, DeFi is continually evolving, offering users new ways to interact with their finances.

This constant innovation ensures that DeFi stays at the forefront of the financial technology revolution.

Risks of DeFi

Despite its advantages, DeFi also comes with risks. Smart contracts, while automated, are still prone to bugs and vulnerabilities.

There’s also the risk of volatile crypto prices and potential regulatory challenges. Therefore, it’s crucial to understand these risks before diving into DeFi.

1. Smart Contract Vulnerabilities: A Double-Edged Sword

While smart contracts automate and enforce agreements in DeFi, they can also be prone to bugs and vulnerabilities.

If a smart contract is poorly written or not adequately audited, it can be exploited by malicious actors, leading to significant financial losses for users.

2. Lack of Regulation: A Wild West Environment

DeFi operates in a largely unregulated space, which can be both a strength and a weakness. The lack of oversight means that there’s often no recourse for users if something goes wrong.

It also opens the door to fraudulent schemes and unethical practices, making due diligence essential for participants.

3. Liquidity Risks: The Challenge of Withdrawals

Liquidity refers to how easily assets can be converted into cash or other liquid forms.

In some DeFi protocols, there might be insufficient liquidity, making it challenging to withdraw or trade assets without significantly impacting the market price. This can lead to financial losses or lock-up of funds.

4. Complexity: Not for the Faint of Heart

DeFi platforms often require a certain level of technical knowledge and understanding.

The complexity of interacting with various protocols, managing private keys, and navigating decentralized exchanges can be overwhelming for newcomers. This complexity can lead to mistakes and potential financial loss.

5. Custodial Risks: The Responsibility of Ownership

In DeFi, users are responsible for the security of their private keys and digital assets. Losing access to private keys or falling victim to phishing attacks can result in the permanent loss of funds.

The lack of a centralized authority means there’s usually no way to recover lost or stolen assets.

6. Market Risks: The Volatility of Crypto Assets

The value of cryptocurrencies and other digital assets used in DeFi can be highly volatile.

Rapid price fluctuations can lead to significant financial losses, especially for those engaged in high-risk activities like margin trading or yield farming.

Understanding and managing this volatility is crucial for success in the DeFi space.

7. Interoperability Issues: A Fragmented Ecosystem

While many DeFi platforms aim for interoperability, not all protocols are compatible with one another. This fragmentation can lead to inefficiencies and difficulties in moving assets between different platforms.

It may also expose users to additional risks if they need to rely on less secure bridges or third-party services.

8. Privacy Concerns: Transparency at a Cost

The transparency of blockchain technology, while a benefit in many respects, can also be a risk in terms of privacy.

All transactions are publicly recorded on the blockchain, potentially exposing sensitive information about users’ financial activities. This lack of privacy can have implications for both personal security and financial strategy.

What is Metaverse?

Metaverse is a virtual universe powered by technologies such as Virtual Reality (VR), Augmented Reality (AR), Blockchain, Artificial Intelligence, Internet of Things, 3D reconstruction etc., that offers a photo-realistic vivid experience to its users. Providing an immersive and life-like experience, users can play games, set up a workspace, connect socially, host meetings and conferences, shop around and do much more in a metaverse.

MetaFi is a unique player in the DeFi ecosystem. Its platform aims to simplify the user experience in DeFi by providing a unified interface for managing digital assets across multiple protocols.

A metaverse built on a blockchain network offers an open and decentralized ecosystem, useful in creating a transparent, tamper-proof, and secure infrastructure. Moreover, blockchain helps regulate digital collectability of assets, governance, digital proof of ownership, transferring value using crypto and more.

The concept of ‘Metaverse’ was first introduced by the author Neal Stephenson in his science-fiction novel Snow Crash published in 1992. As he envisioned, the metaverse is a virtual world that can be accessed using highly specialized goggles or headsets, using which users can interact with each other through their Avatars. In the novel, anything is possible in virtual reality, which can be customized based on user preference. Thinking about it, isn’t it similar to the currently emerging metaverse projects?

With big firms and entrepreneurs taking a step forward and investing in it or building their metaverse projects, the metaverse is indeed emerging as a futuristic concept that has immense potential to revamp various industries.

The Metaverse fosters an open, decentralized ecosystem when built on a blockchain framework. This is invaluable for creating a transparent, secure, and robust infrastructure.

The blockchain enhances control over digital assets, governance, proof of digital ownership, and the transfer of value via cryptocurrencies, among other things.

This open-ended virtual reality could be tailored according to user preferences. Interestingly, this vision resonates with the emerging metaverse projects of today.

How does MetaFi work?

MetaFi utilizes the availability of metadata for assets on blockchains to enhance interoperability. An NFT’s metadata, for example, will probably include a link to the related art. Adding metadata to a Bitcoin(BTC) transaction is also possible, allowing you to include unencrypted data.

MetaFi operates by integrating various DeFi protocols. Users can manage their assets, trade, lend, borrow, and earn yield, all from a single interface. It’s like a dashboard for your DeFi activities.

MetaFi’s core feature is its interoperability. It doesn’t limit users to a single blockchain or protocol. Instead, it provides access to a wide range of DeFi services, allowing users to maximize their returns and diversify their investments.

MetaFi’s goal is to integrate a wide range of blockchain functions into a single Meta ecosystem, which will be interoperable due to metadata standards used across many platforms and blockchains. MetaFi can use a combination of non-fungible and fungible currencies and community governance mechanisms like Decentralized Autonomous Organizations (DAOs). The integration of these multiple crypto primitives creates a full-fledged parallel economy that uses blockchain to serve people all over the world.

MetaFi, thus, aims for mass adoption of Web3 and blockchain technology by creating and fostering a new ecosystem based on defined metadata parameters based on digital assets. This, in turn, will expand the use cases of Web3 and blockchain.

Hence, the word, ‘Meta,’ can be understood as “all-encompassing” and is an acronym for metadata rather than the metaverse, even though many of these applications will be developed for metaverse usage.

Assets will be machine-readable and sortable if metadata standards are created that are usable on any blockchain. If all blockchains have a unified metadata standard, each blockchain will display its metadata similarly. In such a case, an NFT marketplace, for example, might begin to recognize and sort NFTs from several blockchains.

Having similar Metadata standards can lead to stable and interoperable projects. MetaFi also includes community governance, such as Decentralized Autonomous Organizations(DAOs). Combining all these components can build an entirely functional parallel ecosystem that serves users around the globe using blockchain.

Why is MetaFi So Famous?

MetaFi has been quite famous in recent years due to the dual benefits of metadata and Defi in its usage. When people see that they are getting the help of two things into one, they choose that option instead of opting for them individually. People always tend to find more innovative things that would take their respective businesses to achieve new heights as never seen before.

And, through MetaFi, it has been said that people can effectively integrate it into their business model. Many use cases are offered in MetaFi, which is not found in any other cryptocurrency model on the internet. Even the exciting nature of Metaverse attracts most people to use MetaFi for their companies.

Metaverse Framework?

Metaverse can be the interface layer which exists between the digital world and the real world. It is an interconnected set of experiences which looks more like science fiction movies but it is starting to be considered the new reality of the future.

In order to interact with Metaverse we can use many different hardware and softwares. Virtual Reality, Augmented reality and extended reality infrastructure are used to create a cool experience. Although it is accessible with computers and mobile phones as well. The more futuristic the infrastructure is, the better quality the experience has.

When it comes to Metaverse, many people consider it a virtual reality game. But we shouldn’t forget that there is a real parallel economic system inside Metaverse which makes it a virtual world in which you can do so much more than just playing games.

Metaverse consists of two main layers. The one on the surface would be the interface layer which is accessible via AR, VR and XR tools. The other layer which is hidden from the eyes of the users is the financial compute layer. This inner layer is where the computations are executed and programs are written by developers.

Metaverse is a democratic and transparent system in which everyone can participate, buy and sell virtual lands or play games and earn incentives. Ethereum is an example of a protocol in the financial compute layer. It provides smart contracts and a ledger to save all the transactions that happen inside Metaverse. All the technologies in this inner layer are considered to be related to web 3.0. NFTs and P2E games are the seeds of this virtual economic system.

The Main components of Metaverse?

The foundation: this level consists of Layer 0, Layer 1 and Layer 2 Blockchains such as Polygon, Ethereum, etc.

For example, Ethereum provides smart contracts which is like smart money; Money that can be programmed. All the smart contracts on Ethereum are able to interact with each other if they are programmed to do so. Since other applications in Metaverse will be built upon these protocols; this uniformity will create a great chance for interoperability among applications.

They have a shared application logic which makes communication among them possible by cross-chain bridges. If an application doesn’t iterate with the others; it will be isolated and the value inside it will be trapped and wasted.

DeFi: the layer above the foundation is where the financial transactions take place. It’s like Money legos which function through smart contracts. Examples would be Uniswap or Chainlink.

Virtual worlds or Verses: The surface layer will be what the retail users interact with via VR, AR, XR or computer infrastructure. These verses are connected to the foundation and the DeFi layer based on their compatibilities.

Any digital space in which we can socialize, play games and do economic activities can be considered a virtual world. The things you can do in these verses are limitless. You can buy lands as NFTs; keep them for a while and then sell them and gain profit. Decentraland is an example of a Metaverse. There will be in-game currencies that the users can earn by completing specific tasks or they can join in governing the virtual world by voting in the DAOs.

MetaFi would consists of the last 2 layers of DeFi and Verses. The different components of MetaFi such as NFTs, avatars and Access Tokens will work hand in hand and will have overlaps in many cases. For example the NFTs in Axie Infinity which bear yields can be transferred to other kinds of NFT use-cases. Many DeFi protocols are launching their own NFTs as well to join the gaming industry and to have a place inside Metaverse.

Structure of MetaFi

You can understand MetaFi in detail through the following components that determine its structure:

Foundations

Foundations, essentially the building blocks and the most important part of any MetaFi system, contain the core frameworks, which would serve as layer zero, one, and two solutions. The core frameworks use shared application logic and security to develop applications that run on top of them.

DeFi

DeFi includes financial applications that run on the main frameworks or protocols. You can consider them as money legos that work as unstoppable programs that use smart contracts to enable intricate financial dynamics.

Verses

Verses are a collection of domains or parallel verses that make up the metaverse. The foundational layers of verses will remain connected to the various virtual worlds based on compatibility and cost-effective value transfer.

The Working procedure of MetaFi

MetaFi controls the accessibility of metadata for assets on blockchains to enhance interoperability. For instance, a link to the associated art will most likely be present in the metadata of an NFT. It is also possible to add metadata to a Bitcoin (BTC) transaction, giving you access to unencrypted data.

The goal of MetaFi is to unite several blockchain activities into a single Meta environment that is interoperable thanks to metadata standards that are used by numerous platforms and blockchains. Numerous fungible and non-fungible currencies, as well as decentralized autonomous organizations, can be used with MetaFi (DAOs). By combining these many crypto primitives, a full-fledged parallel economy using blockchain to benefit people worldwide is produced.

To achieve this, MetaFi creates and supports a unique ecosystem based on predefined metadata parameters based on digital assets. This ecosystem aims to promote the widespread adoption of Web3 and blockchain technology. This will increase the use cases for blockchain and Web 3. Since many of these apps will be used in the metaverse, the term “meta” can be interpreted as “all-encompassing” and is an acronym for metadata.

If metadata standards are created that apply to all blockchains, assets will be machine-readable and sortable. Each blockchain would display its metadata uniformly if there were a common metadata standard across all blockchains. In such a scenario, an NFT marketplace might begin to recognize and categorize NFTs from several blockchains.

Equivalent metadata standards can help steer projects toward stability and interoperability. Community governance is also a part of MetaFi, like Decentralized Autonomous Organizations (DAOs). By fusing all these components, a parallel ecosystem that supports blockchain use globally can be built.

Why MetaFi is so popular with its application?

Let’s think about what is operating MetaFi’s growth right now. MetaFi can make use of the value and flow of digital assets in the complimentary market. It creates new processes for resolving in-the-moment find pricing, enabling the identification of hidden value. The complexity of the device is fully utilized by the creators. NFT platforms simultaneously decide the financial terms on which communities and artists can conduct business with users. NFT developers can create immortal tokens using their customized social tokens.

Executing the MetaFi requires the DAO and other capable management. Together with DAOs, Defi has provided customers with community-based insurance.

In the long run, the emergence of play-to-earn games and novel data monetization strategies may pave the way for MetaFi-based applications.

How does Metaverse integrate MetaFi?

Metaverse in itself is a complex virtual universe that integrates several elements and technologies of Web3 and even Web 2.0 to create a virtual universe that is decentralized and financially independent.

Crypto assets, one of the key financial elements of a metaverse, assist the creator economy in various ways. In MetaFi, crypto’s functionality relies heavily on the metaverse’s two primary layers – the interface layer and the financial computation layer, each with its own capabilities. Using various hardware and software technologies, the interface layer assists the end-user in experiencing the metaverse. Meanwhile, the financial compute layer is the foundation for conducting metaverse computation activities. The financial compute layer establishes a decentralized, democratic, and transparent framework for designing the metaverse’s creator economy logic.

The potential of MetaFi DeFi in the metaverse may be seen vividly in the metaverse’s background. It demonstrates the feasibility of establishing an alternative economic system based on decentralized ledgers which support crypto and global accessibility while being entirely transparent. Simultaneously, the metaverse also pioneers blending multiple digital-first economies such as the NFTs and Play-to-Earn games.

Finance in Metaverse

According to a report by Emergent Research, the global metaverse market size was 47.69 billion U.S. dollars in 2020, which is predicted to reach 828 billion U.S. dollars by 2028.

At the same time, Citi, one of the world’s major financial services companies, estimates that the metaverse economy’s entire addressable market will increase to between $8 trillion and $13 trillion by 2030.

Citi further stated that the Metaverse finance (MetaFi) would most probably be a blend of Decentralized Finance (Defi), Traditional Finance (TradFi), and Centralized Finance (CeFi), “with new products specifically designed to meet the unique needs of the new ecosystem built on standardized metadata parameters.”

Financial services can play an essential part in the evolution, from initial capital formation to enabling trade inside the metaverse.

There is no limit to opportunities and the financial benefits a metaverse may bring. From top brands like Dolce & Gabbana or Zara setting up their stores on the metaverse or hosting virtual events, the opportunities it provides are immense. Ariana Grande’s concert in the metaverse, held in 2021, is a prime example of a wildly successful event in the virtual universe.

Envision a MetaFi Universe

Although MetaFi seems complex to perceive and MetaFi projects are still under development, we would like to show you how a feasible MetaFi ecosystem may function through a fictitious trading metaverse named, for instance, “MetaFi World.”

Consider “MetaFi World” as a financial metaverse that incorporates trading and social media components into a 3D world connecting and uniting traders worldwide. It can enable users to trade any asset, both crypto assets like NFTs and tokenized traditional assets, like stocks, bonds and commodities.

Moreover, “MetaFi World” will integrate elements of GameFi, SocialFi and Web3 to create an immersive platform. The “MetaFi World” can be divided into futuristic trading zones where users trade and display their NFTs and communicate with each other using text, images or voice. The gamification elements within the platform can increase user engagement and client satisfaction.

You could become a part of “MetaFi World” by creating an Avatar and connecting your wallet with the ecosystem. It would be like a social environment that allows you to chat and trade together in real-time. This virtual world can merge social media platforms like Twitter or Reddit, making social interaction fun and engaging.

How does Metaverse benefit from MetaFi?

The 3D virtual environment of metaverse helps users engage in various activities related to work, business or other social functions without geographical limitations. It offers virtual lands as NFTs, which can be purchased, sold or used to build anything. Such virtual worlds now come with various add-ons, such as wearable NFTs, consumables and so on, making the connection between the virtual and real worlds more profound.

Some companies, such as Walmart, have already envisioned a virtual shopping experience in which consumers connect to the metaverse to shop for goods and services. Other companies began selling land on which customers could build their dream homes, architectural marvels, or hang out with friends.

While offering all such advantages to the users, the metaverse faces a major concern: interoperability. Interoperable metaverse ecosystems allow objects, such as in-game items like weapons, in a metaverse to be transferred from one metaverse project to another. It will also facilitate users to move from one metaverse world to another using Avatar. However, the limitations in technology that can offer seamless interoperability to metaverse are yet to be achieved.

MetaFi provides an infrastructure with specified metadata standards that will allow virtual worlds to communicate effortlessly. It also aids in the enhancement of digital assets and virtual tokens’ functionality. This allows them to expand their use cases well beyond their native platforms. Another use case is decentralized identity management and reputation management systems, which allow users to easily and securely access their digital identities and assets.

MetaFi simplifies DeFi for its users. It eliminates the need to navigate multiple platforms, making DeFi more accessible to beginners. It also provides a holistic view of a user’s portfolio, making it easier to manage and optimize.

MetaFi also offers security features. It uses smart contract-based wallets, giving users full control over their assets. Additionally, MetaFi’s integration with various protocols allows users to benefit from the security measures of these individual platforms.

Immersive Financial Experiences: A New Dimension of Engagement

MetaFi offers users the ability to engage with financial services within a virtual, immersive environment.

This can transform mundane financial tasks into interactive experiences, making banking, investing, and financial planning more engaging and intuitive.

Decentralized Financial Control: Empowering Users

By leveraging decentralized finance (DeFi) principles within the metaverse, MetaFi can provide users with more control over their financial assets.

This decentralization eliminates the need for intermediaries, reducing costs, and enhancing security.

Personalized Financial Avatars: Tailored Services

MetaFi can allow users to create personalized financial avatars. It represents their financial goals, risk tolerance, and investment strategies.

These avatars can interact with various financial services within the metaverse, providing a tailored and unique user experience.

Real-Time Collaboration: Bridging Geographical Gaps

Within the MetaFi environment, users can collaborate in real-time with financial advisors, investment partners, or other stakeholders, regardless of their physical location.

This can foster more effective communication and decision-making in financial matters.

Gamification of Finance: Learning Through Play

MetaFi can introduce gamification elements into financial education and investment strategies.

By turning financial concepts into interactive games and challenges, users can learn about finance in a more engaging and effective way.

Integration of Virtual and Real Assets: Seamless Transactions

MetaFi can enable the seamless integration of virtual assets within the metaverse with real-world financial assets.

This can allow users to manage, trade, and invest in both virtual and real assets through a unified platform, enhancing convenience and efficiency.

Enhanced Security: Leveraging Blockchain Technology

By utilizing blockchain technology, MetaFi can offer enhanced security for financial transactions within the metaverse.

This decentralized approach ensures transparency and integrity, reducing the risk of fraud and unauthorized access.

Accessibility and Inclusion: Finance for All

MetaFi has the potential to make financial services more accessible to a broader audience.

By providing an intuitive and engaging platform, it can attract individuals who may feel alienated or overwhelmed by traditional financial systems, fostering financial inclusion.

Sustainability and Ethical Investing: Aligning Values

Within the MetaFi environment, users can explore and engage with sustainable and ethical investment opportunities.

This can allow individuals to align their financial strategies with their values and contribute to positive social and environmental impacts.

Advantages of MetaFi

As DeFi and Metaverse push each other to grow in a reciprocal manner, the ultimate outcome would be sovereignty of wealth and promoting generational wealth transfer.

Inclusion is one of the advantages of Web 3.0 as well as MetaFi. When DeFi intertwines Metaverse, the digital creators whose art is not valued by the traditional systems will get incentivized.

For example, if we have a high value NFT which is so expensive to be owned by one game player; using MetaFi it will be possible to use a fraction of that NFT as collateral in a DeFi lending platform.

How can we accelerate the MetaFi progress ?

DeFi has a lot of complexities and it used to be excluded to developers and tech-savvys in the past. Hopefully, with the development of NFT platforms and market places; creators and artists can set economic terms for exchanging what they have created. Communities and fans can share the benefits of their favorite projects as well. Since DAOs play an important role in the governance of the communities which are related to MetaFi; the more improvement we see in DAOs, the better management we will have in the MetaFi industry.

Using MetaFi technologies we can capture value in digital assets. We can bring monetization into games and when the game players can earn money by playing games, they will be willing to stay on the platform more than before. The more a technology gets used, the faster it will develop and grow.

If we can easily insert and plug NFTs into DeFi protocols, we will be on the right path to fully unlock the DeFi value in the Metaverse and to accelerate the MetaFi growth.

Why Should Businesses Go for the Adoption of MetaFi ?

When many businesses are looking for MetaFi use cases to know about the work behind MetaFi in a more detailed way. It would also make them question how the companies can adopt the use of MetaFi through some of the driving reasons mentioned below: –

The technologies of MetaFi can bring relatively better options available in the market for getting a good value. It’s specifically for the digital artworks displayed in the open markets. Moreover, it even allows your business to make price discoveries, creating many opportunities to release the hidden value of the work and have better blockchain solutions.

Despite the development of various exciting play-to-earn games and different monetization techniques, the users hailing from Gen Z make the MetaFi platform an exciting prospect and platform to use.

There are also different governance models, for example, DAO. They play quite a crucial role in adopting MetaFi across all the business sectors using proper governance methodologies.

Limitations of MetaFi

A lot of research and experiments are needed to push MetaFi to the fullest potential. There are still some complications and problems which need to be fixed by the pioneers in the industry. One of the problems is NFT appraisals. It is hard to estimate the real value of an NFT and if we fractionalize a high value NFT; the governance and legal terms will be an issue. Especially if that specific NFT is yield bearing or owns voting rights.

The Blockchain industry which created the foundation of MetaFi is not matured yet as well. Some blockchains are not 100% interoperable which might cause isolation of value.

Conclusion

MetaFi is a relatively new yet futuristic concept aiming to bring several Web3 aspects under one umbrella. It has the potential to reconstruct commerce and trading by incorporating it within the metaverse so that users can trade and transact in real-time without geographical limitations.

Although the concept of MetaFi is still a blur to many and the technological development of the metaverse is still under scrutiny, it is worth mentioning that, if implemented properly, MetaFi shall bring vast interoperability to the metaverse while users can leverage the full benefits of DeFi.

Source: Burke, Jamie. “MetaFi: DeFi for the Metaverse.” Outlier Ventures, https://outlierventures.io/research/metafi-defi-for-the-metaverse/. Accessed 1 June 2022.