As the third largest Layer 2, what progress and ecological projects does Metis have worth paying attention to?

With the advent of the Cancun upgrade, core products such as decentralized sorters have opened a second spring for Metis.

Written by: flowie, ChainCatcher

On the eve of the Cancun upgrade, Ethereum Ecological Layer 2 is finally proud. After Optimism led the rise, Metis, which has a lower market value, continued to convince people with its rise. Its token price rose by more than 92 US dollars, an increase of 230% in the past week, making it the Layer 2 with the largest increase.

According to L2beat data, MetisO’s TVL is currently US$723 million, surpassing Base and zkSync to rank third. According to official data on December 27, the number of Metis active wallets has increased by 850% in the past 10 days.

Source: L2beat

As a veteran Layer2 project established in 2021, Metis has always had a halo over its head. It is a project founded by Vitalik’s mother Natalia Ameline and his mother’s best friend Elena Sinelnikova. In the recent meme market atmosphere, the sharp rise in METIS has led to many crypto users jokingly calling it a Layer 2 meme coin. In addition, many meme coins have appeared on the Metis network.

In addition to the background of Vitalik’s mother platform, the ecological development fund Metis EDF launched by Metis on December 18, just before the surge in TVL and tokens, is also widely regarded as the main reason for the rise. According to the official announcement, Metis plans to allocate 4.6 million METIS tokens for “sequencer mining, retroactive funds, deployment of new projects, etc.” The specific distribution time is scheduled for the first quarter of 2024 when Metis decentralizes After the release of the Sorter mainnet. Metis’ new ecological fund has also stimulated a collective rise in its ecological projects.

Source: RootData

Previously, Metis announced that it would successively launch decentralized sorters, hybrid rollups and other initiatives in 2024. With the upcoming Cancun upgrade, it provides a lot of room for imagination for encryption users.

On the eve of the Cancun upgrade, what are the features and developments of Metis worth paying attention to?

Metis is based on Optimistic rollup Layer2, which was originally a fork project of Optimism and was launched on the mainnet on November 19, 2021.

As the star layer2 project of the last cycle, Metis first attracted attention when it was co-founded by Vitalik’s mother. Metis is also famous for advocating the concept of decentralized autonomous companies (DAC). Vitalik Buterin, the founder of Ethereum, first proposed the concept of a decentralized autonomous company (DAC), a decentralized enterprise that runs all its business on the blockchain. Metis is the first project to implement the DAC architecture. Compared with DAO, which only handles voting and governance, DAC is more like a fully operational company, undertaking all the tasks of a non-blockchain company—managing payroll, marketing, information delivery, insurance, etc. And using tokens as an incentive mechanism, everyone can create their own decentralized business and collaborate with others in the decentralized world.

On strategic lines such as technology, Metis also has some differentiated methods that have attracted much attention.

1. Try to decentralize the sorter and decentralize power

Layer2 has been criticized for a long time because of the centralization problem of the sequencer, but at the same time it has made slow progress in solving the centralization problem of the sequencer.

According to a research report released by Binance in August this year, all major Ethereum L2s rely on centralized sequencers (dedicated sequencers officially designated by the project). Although many Layer 2s have addressed the decentralization of sorters as part of their roadmap, there is no real consensus on how to achieve decentralization.

What are the dangers of current centralized sorters? To put it simply, there are two aspects. One is that it is easy to induce a single point of failure; Arbitrum was down twice due to Sequencer node attacks in 2021. The second is to over-concentrate resources. The project party monopolizes all income generated from the sequencer, but the community cannot share the benefits.

However, due to some practical considerations and interest drives, the progress of decentralized sorters has also been slow. Crypto KOL Haotian pointed out. Because Sequencer is a core component of layer 2, if a distributed Sequencer is used from the beginning, the potential risk of failure will affect the user experience. Therefore, most project parties prefer centralized operation and maintenance in the early stage to ensure safety and stability. The Binance research report mentioned that users can actually bypass the sequencer and submit transactions directly to L1 (as long as they are happy and willing to pay the increased gas cost). While a misbehaving sequencer may cause transaction delays and users to incur additional fees, it ultimately cannot be fully audited. This is one of the reasons why no large L2 company has focused heavily on decentralized sorters before.

At the same time, using a centralized sorter also has many benefits for the project side. For example, a centralized sequencer can greatly improve transaction confirmation speed and reduce transaction costs. More importantly, it is driven by interests. The centralized sorter has obtained the right to sort transactions and can easily maximize its own interests. For example, it can control Gas pricing power and directly extract profits.

The Binance research report mentioned that in the early days, most leading Layer 2 companies focused on improving their core products and functions instead of focusing on decentralization, which is understandable. However, as Layer 2 network companies mature, the market is paying more attention to decentralizing the sequencer and improving credibility. As the Cancun upgrade approaches, it can be seen that discussions about Metis are also focused on solutions for decentralized sorters.

Currently, many solutions have been proposed for the decentralization of sorters. Crypto KOL Haotian (@tmel0211) summarized it into two strategic paths. One is the “soft distribution” strategy of sequencers attempted by Arbitrum, Optimism, Starknet, and Zksync; that is, the strategic architecture of Stack was chosen, “sharing the core Sequencer. Create a Superchain multi-chain portfolio architecture, and then jointly govern through MPC multi-signature, governance voting and other methods, reaching a social “transparent and decentralized” consensus.”

The other is the “hard distribution” strategy of sorters attempted by Metis, EspressoSys, AstriaOrg, radius, etc., which emphasizes the decentralization of technical consensus. For example, the sorter is run by multiple agents, and individual sorters are constrained through a reward and penalty mechanism to achieve fair sorting. , transferring rights and benefits to the community.

Taking Metis as an example, Metis sets up a sorting pool composed of multiple sorter nodes that have been reviewed by the administrator. At least 2/3 of the sorter signatures are required to submit the packaged batch to the Rollup contract on L1. At the same time, in order to prevent the sequencer from committing evil acts, Metis introduced Rangers to conduct random checks on the blocks, including whether the order of transactions has been exchanged, whether there have been malicious transactions inserted, etc.

Under such a sorter architecture, Metis also uses a reward and punishment mechanism to motivate and constrain the sorter nodes. On the one hand, sequencers entering the sequencer pool need to pledge at least 20,000 METIS to have the right to produce blocks. Sorters participating in block production can receive token rewards. Users can also choose sequencer nodes through staking and share rewards; on the other hand, validators who check blocks can also receive mining rewards. When a sorter node commits evil, the system will punish the assets pledged by the evil node, and the verifiers can share some of the confiscated assets.

Since Metis announced in early 2022 that it would adjust its architecture to achieve sorter centralization, Metis’ decentralized PoS sorter has now been running on the Holesky test network and will undergo community testing on January 3, 2024. At that time, users can deploy it on the Holesky Interact with Metis dApps on the testnet to earn rewards. Metis has indeed made substantial progress on the decentralized sorter. 《Metis Community Testing》

On December 18, the Metis Foundation announced that 300 of the 4.6 million METIS tokens in the ecological development fund will be used to incentivize sorter mining. The specific distribution time is scheduled after the release of the Metis decentralized sorter mainnet in the first quarter of 2024. “Metis EDF: A New Chapter for Metis”

2. Combine Optimistic Rollup with zero-knowledge proof to build the first Hybrid Rollup

Zero-Knowledge Rollups and Optimistic Rollups are currently the two mainstream Rollup architectures, but they each have obvious advantages and limitations.

Optimistic Rollup has good scalability and is compatible with EVM, but due to the need to submit a fraud certificate, it may take up to a week for the transaction to reach final confirmation. Although Zero-Knowledge Rollups can achieve faster transaction confirmation, it faces higher costs and security issues due to the need to verify the validity proof on the chain. The former has poor user experience, and the latter has poor cost-effectiveness and sustainability.

Therefore, Hybrid Rollup, which combines Zero-Knowledge Rollups and Optimistic Rollups, has also become a major trend. Projects such as Fraxchain, Aztec, Miden and Ola have successively announced Hybrid Rollup.

In March this year, MetisDAO also officially announced that it would build the first hybrid rollup by combining the optimistic rollup architecture with zero-knowledge proof to achieve the scalability of Optimistic Rollups and the security and fastest transaction confirmation of Zero-Knowledge Rollups. features to provide users with a better experience.

According to its official blog, in the second quarter of 2024, Metis will promote the launch of Hybrid Rollup on the test network.

3. In terms of token function, in addition to being used for governance, METIS is also used for network gas fees and node pledges, etc.

In addition to being used for governance, Metis’ native token METIS has more use scenarios. For example, compared to most Layer 2, which uses ETH as gas fee, Metis requires METIS as gas for each transaction. We know that most L2s use ETH instead of their own tokens for gas fees. On the one hand, ETH is more popular among users, and secondly, earning ETH seems to be more cost-effective than holding their own tokens.

METIS can also be used for Builder mining rewards, where DAC members receive METIS rewards for every transaction completed on their Layer2 network.

In addition, as mentioned earlier, in the decentralized sorter pool, the sorter node needs to pledge METIS to be eligible to be selected as a sorter node, and users can also select the sorter node through pledge and share the rewards; METIS is also used to incentivize Rangers To supervise and avoid the occurrence of evil behaviors in the block.

4. Metis storage layer structure changes

In order to reduce Gas, Metis has tried to change the storage layer structure and changed the form of publishing data on Ethereum. By integrating decentralized storage Memolabs, only transaction commitments are submitted to the Ethereum main chain in merkletree format, and complete MemoLabs are provided. Verifiers can download transaction data and submit fraud proofs when necessary. This initiative significantly reduces storage costs. Metis’s gas is generally lower than that of mainstream layer 2.

In October this year, the Ethereum Layer 2 network Metis’ proposal to “switch data availability back to Ethereum” was approved. Metis will re-store all transaction data on the Ethereum mainnet from the off-chain storage layer to the original traditional Optimistic Rollup format, thereby eliminating the complexity layer in the Metis architecture and enabling complete data availability to achieve the highest security of Rollup Standard and decentralized PoS orderers are the most ready. It is expected that the handling fee of Metis will become higher and will be comparable to Optimsim.

Inspired by the ecological fund of over 100 million US dollars, what projects on Metis are worthy of attention?

According to Metis official website information, there are more than 80 projects in the Metis ecosystem. Most are multi-chain projects such as AAVE, Chainlink, and LayerZero, and there are about 10 single-chain projects such as NetSwap, Maia DAO, and Hummus.

Judging from the data on defillama, most of its ecological projects are low-market value projects, and there has been an obvious upward trend in the past month. Encouraged by the 460 METIS Ecological Development Fund, whether its ecology will prosper has also been one of the focuses of recent concern among crypto users. This article takes stock of noteworthy projects on the Metis network.

Maia DAO (MAIA) giving Hermes (HERMES)

Founded in 2022, Maia DAO is the first decentralized community-owned reserve currency protocol in the Metis network.

Maia DAO currently has the sub-protocol Hermes DEX, TALOS transparent automated liquidity full-chain strategy, Maia decentralized strategy library and Ulysses Omnichain liquidity protocol.

The current TVL of Maia DAO reaches US$15.76 million, an increase of 141% in the past week, mainly contributed by Hermes. The token of Maia DAO is MAIA, which is 100% fairly launched by the community. The current total supply of MAIA is 9,785 pieces, with a fully diluted market value of $586,000. Its token is currently quoted at $58, with an increase of 222% in the past seven days.

Hermes is similar to uniswap. One of the key features of Hermes V2 is the ability to exchange between any chain using centralized and unified liquidity. This allows users to easily move between different chains and take advantage of the unique features and opportunities each chain offers. The total supply of HERMES is 244 million pieces, and it is currently quoted at US$0.13, with an increase of more than 300% in the past seven days.

NetSwap（NET）

Founded in 2022, Netswap is a decentralized exchange running on Metis, using the same AMM model as Uniswap, but with lower transaction fees and faster transaction speeds.

NetSwap’s TVL is US$9.46 million, making it the second largest native project after Maia DAO. Its TVL has increased by 154% in the past week. The total supply of its token NETT is 16,666,667, with a fully diluted market value of US$138 million. It is currently trading at US$1.39, an increase of more than 1020% in the past seven days.

Tethys Finance（TETHYS）

Tethys Finance is a decentralized trading and lending protocol on Metis. Tethys Finance visualizes users’ participation in projects on the Metis main network and their funding status to facilitate users to manage their assets.

Tethys Finance’s TVL reached $4.98 million, up 178% in the past week. Tethys Finance’s token TETHYS is currently trading at US$0.86, with an increase of 277% in the past seven days. Its total supply is 6,159,637 coins, and its fully diluted market value is US$5.31 million.

Revenant（GAMEFI）

Revenant is the first decentralized gaming platform on Metis for gamers, game developers and investors.

Revenant has launched the arcade fighting game “Battle of Olympus”, and is currently developing the NFT-based kingdom management game Lazarus. Revenant has also invested in MetaGods, a P2E action role-playing game based on Froyo Games, the multi-chain GameFi infrastructure of Ethereum and Binance Smart Chain.

Revenant’s native token is GAMEFI, with a total supply of 3 million and a fully diluted market value of more than 8 million US dollars. The price of GAMEFI token is currently at $2.61, up 619% in the past 7 days.

Hummus Exchange （HUM）

Hummus Exchange is a unilateral AMM (decentralized exchange) on Metis designed to exchange stable cryptocurrencies (USDT, USDC, DAI) on the Metis blockchain. Hummus features a single token supply, eliminating the risk of impermanent losses for liquidity providers and providing traders with ultra-low slippage.

The total supply of Hummus Exchange token HUM is 300 million, with a fully diluted market value of $14.46 million. , currently trading at US$0.048, with an increase of 347% in the past seven days.

Athena Finance （ATH）

Founded in 2023, Athena Finance is a decentralized yield aggregator on Metis designed to maximize yield and simplify the DeFi experience on the Metis network. The platform allows users to deposit stablecoins and earn higher yields from the Hummus platform without staking their HUM and worrying about accumulating veHUM. In June this year, Athena Finance launched its mainnet.

In addition to the above native projects on Metis, many meme coins have appeared on Metis recently, such as the meme VMUM named after “Vitalik’s mother”; Vitalik’s mother’s pet cat meme coin BARSIK; the dogecoin METINU on Metis, etc., most of which currently have market value lower.