MetaFi: A DeFi for Metaverse

Published by : Pankaj | Mar-14-2022

MetaFi: A DeFi for Metaverse

  • In the crypto space since 2018, due to various reasons, Decentralized Finance (Defi) has been the talk of the town. So, the vision for broader financial inclusion and principles guiding the sovereignty of wealth concept of Defi relies on permissionless innovation. At the same time, the emergence of another technological innovation has in the form of the metaverse space and digital experiences.

    Now, the global crypto community convergence of both technologies is in the form of MetaFi. It is gripping up many debates everywhere. Though,  Defi has almost low adoption rates and successfully gathered mainstream attention from crypto investors. Before you try to learn more about the MetaFi Defi for the metaverse, it is vital to understand the background for its development. But, Defi solutions can unlock value in the metaverse through MetaFi functionalities. What is the chance of success in a convergence between metaverse and Defi?

    What is MetaFi?

    MetaFi is the integration of two words-Meta for metadata and Fi for Defi. Although for traditional Web2 extensive applications, including games, social media, and the metaverse is the ideal move. Its goal is to standardize blockchain technology and its work. So it could help to build a unifying standard for enhancing interoperability.

    In other words, we can say the world’s initial NFT-based Defi platform that empowers lending and value appraisals at scale is MetaFi. It is a concept that gives advanced and sophisticated Defi Infra. It is to all the distinct types of projects such as metaverse, GameFi, SocialFi, Web3, and NFTs and puts them under one umbrella. Thus it is only viable due to metadata that defines ownership of assets.

    Although, the idea of MetaFi aims is to put in place a wide range of blockchain functionality into one Meta ecosystem. And interoperable thanks to defined metadata standards used across variant platforms and blockchains. With community governance such as Decentralized Autonomous Organizations (DAOs), MetaFi can comprise a mix of fungible and non-fungible tokens coupled. So to build and foster a new ecosystem built on standardized metadata parameters is the aim of MetaFi. The construction is around digital assets that grant mass adoption in Web3 and blockchain technology. Also, the mixture of these different crypto primitives empowers a full-fledged parallel ecosystem. That serves users all around the globe via blockchain. Thus, it gives new use cases to users and players.

    Also, read: Web 3.0 vs Metaverse

    How MetaFi work?

    For assets on most blockchains development, MetaFi takes advantage of the presence of metadata to enhance interoperability. For example, an NFT’s metadata will contain a link to the allied image. You can also link metadata to a bitcoin (BTC) transaction, permitting you to input more information as plaintext.

    Although any blockchain will make assets easy machine-readable. The sortable is through creating metadata standards usable. An NFT marketplace development could begin to understand and sort NFTs from many blockchains if they all present their metadata in the same way.

    Also, read: Safemoon VS Bitcoin: How to examine these two cryptocurrencies

    Applications of MetaFi

    MetaFi is the latest decentralized finance platform for the metaverse that used term may create some confusion. But as mentioned above, many MetaFi applications may be full-blown for practical use in Metaverse. Thus there are more to the benefits that MetaFi can bring, which are almost unlimited.

    MetaFi in the Virtual worlds

    Virtual worlds are digital spaces that present the motive of social, work, commerce, or gameplay environments. It may or may not mimic the original world and its physics. Although they often include an element of scarce land defined as NFTs when they represent the real world. So that they can buy, trade, and build free. Sandbox and Decentraland are the most notable example that comprises popular projects.

    Moreover, the presence of play, building, or meeting with your friends and colleagues, is in the virtual world. Since the beginning of 2021, the acquisition of blockchain in virtual worlds has moved forward somewhat. It is back when only an active dozen people take part per day. Thus virtual worlds come with an extensive range of execution such as wearable NFTs, consumables, etc., and present simple implementations of NFTs into virtual reality.

    Marketplace

    It is the decentralized digital hub that matches supply and demand, permits the discoverability of NFTs, and aids in better price discovery. Advanced NFT Marketplaces such as Opensea, Super rare, and rarely permits users to trade independent and direct mint NFT. Thus for everyone interested in buying and selling, these marketplaces could be a go-to platform for all kinds of NFTs. That includes virtual wearables, in-game items, NFT art or real estate, and much more.

    Read more: Develop Sorare Like NFT Marketplace

    Yield Farming NFTs

    Taking out the loan and then renewing the loaned funds at a higher rate is possible by the collateral use NFT and can produce yield. Thus achieving direct produce yield can be by merging an NFT with yield farming Defi LP tokens. For example, the goal is to provide a framework to add these Defi elements to NFTs through platform-charged particles. So that the owner gets a part of the lender’s earnings or fixed payment for renting their NFTs to others in return.

    MetaFi for Fan Token

    For providing their holders access to various forms of values, these can be fungible and non-fungible tokens. So it can be access to a community, specific people, or tokens minted in the future. Thus the opportunities for discovering fan tokens are still to be complete, and their use cases and forms will vary depending on the issuer. Although, Binance Fan Tokens have their specifics.

    Also, read: Exploring BEP-20 Token Standard on Binance Smart Chain

    Limitation of MetaFi

    To start realizing MetaFi, and its true potential, the development is still much needed. So to bring about a notable wave of adoption, there are a couple of limitations that need to be overcome in the current state of MetaFi. Thus there are three prime challenges to MetaFi that are like to what BNB chain. And these challenges were much in concern by the latest research about MetaFi conducted by Outlier Ventures(2021).

    Lack of necessary tools

    To develop infrastructure for MetaFi such as marketplaces, financialization primitives, creator tools, community-oriented business model, etc. So for running dApp(decentralized application) on top of it, the compilation gives both users and developers simple access to the blockchain. Thus, it is necessary to examine layer 1, improvements on foundation technologies. Making entire applications running on blockchain protocol more accessible will lower transaction fees, increase throughput, and enable scaling.

    Also, read: Why to Develop Defi dApps and Protocols with Binance Smart Chain

    Read more: 5 Ways Blockchain will change Our lives, Economy, And The World

    Legal and governance issues around fractionalization

    NFT carries rights such as voting or yield if we divide NFT into 100 pieces and distribute them to different people. Thus transparent to protect all participants, this area requires to be legitimate.

    Also, read: Emerging NFT(Non-Fungible Tokens) Use case Beyond the Hype

    Standards across blockchains

    Additionally, where MetaFi runs and operates, the challenges come from the blockchain. In general, in Ethereum development, the metaverse and its related applications are being built and different layer one or layer zero blockchains. But these blockchains are yet not 100% interoperable.

    Conclusion

    The entire idea of MetaFi shows how it brings the best of metaverse and Defi together. Thus in the year 2020, the Defi has garnered much popularity. But the working of Defi is limited, and in the future, they do not present viable prospects for large-scale adoption. On the other side, the metaverse is growing as a digital counterpart of the real world.

    blockchain technology. Thus in many areas like Web3, SocialFi, and GameFi, the application of MetaFi has already gone out of the dark. And it can hold great potential soon. Learn more about metaverse and Defi connect with our Oodles expert team.

     

     

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