MetisDAO: Solving the Blockchain Trilemma
By Selene Wang | Crescent City Capital Market Analyst Intern
1. Introduction to Metis
MetisDAO (METIS) is a blockchain-based platform designed to improve scalability, speed, and storage efficiency. Utilizing a Layer-2 solution and EVM-compatible virtual machine support, it aims to reduce gas fees and accelerate transaction times, thereby supporting decentralized applications and businesses.
2. How does it work?
The number of Ethereum transactions has increased in recent years, resulting in more expensive transactions. The Metis crypto protocol utilizes an optimistic rollup to reduce the time and costs of transactions.
Optimistic rollups are one of the most popular iterations of rollups. Instead of submitting proofs with every block to “prove” the state of the chain, optimistic rollups take a more “optimistic” approach. Fraud proofs are the preferred method of arbitration in an optimistic rollup.
With fraud proofs, node operators need only to submit proofs in case of emergencies or “fraudulent activity.” This means that nodes do not have to waste time constructing validity proofs for every block. Fraud proofs are only necessary to dispute an invalid state of the blockchain. This makes transaction throughput much faster.
In a conventional optimistic rollup, all the transaction data is stored on layer-1. To ensure the lowest cost, the Metis Smart L2 only posts the minimal amount of data necessary on layer-1, holding the transaction data off-chain.
The actual transaction data is the off-chain data component; it is placed in Memolabs storage by the Sequencer. Compared to layer-1 Ethereum, storage on Memo Labs is substantially less expensive to include.
3. Tokenomics: The METIS Token
METIS has a max token supply of 10,000,000 (ten million) tokens. The first 49.3% of the total supply of $METIS tokens was minted in 2021. Altogether, the proceeds went towards the Metis cold launch, team, advisor, investor allocation, and ecosystem/community development.
The remaining 50.7% of $METIS tokens are divided into community benefits, early-stage Rangers mining, and Discovery Age community development.
4. Market Analysis
(1) Price & Market Cap Performance:
- Live price: $50.00
- All-Time High: $323.54 (Jan 16, 2022)
- All-Time Low: $3.45 (May 23, 2021)
- Live market cap: $284,091,276
- Circulating supply: 5,686,334 METIS coins
(2) Past performance:
METIS launched in 2021 and experienced significant volatility typical of new cryptocurrencies. MetisDAO TVL surges by 99,800% as the layer-2 race heats up. The largest boost in value on Metis comes from the launch of several new DeFi protocols that are exclusively on the Metis network. These include NetSwap, Agora and Tethys Finance.
In 2024, MetisDAO is developing a hybrid rollup that combines optimistic rollup architecture with zero-knowledge proofs to enhance security and scalability. Metis surged over 23% to a peak of $140, also contributed by the announcement by Binance that it would be listed with a seed tag.
Ten days ago, Metis has announced a strategic partnership with codatta, a leading AI-driven protocol for blockchain metadata analysis. This collaboration marks a pivotal step towards transforming the accessibility, reliability, and utility of blockchain data within the Metis ecosystem.
As of now, METIS is trading around $50.0. Recent developments, including the announcement of a hybrid rollup and various strategic partnerships, have contributed to its price recovery and stability.
(3) Technical analysis:
The following technical analysis of MetisDAO (METIS) utilizes Simple Moving Averages (SMA) and the Relative Strength Index (RSI) to identify potential trading signals and market trends. The analysis is based on the provided graph, which includes 20-day, 50-day, and 200-day SMAs, alongside the RSI indicator.
The long term SMV is below the short term lines, indicating that an upward trend has continued for approximately two weeks. As the three lines are converging, there is a potential for a death cross, which might indicate the end of the current bullish trend.
An RSI value between 50 and 70 typically indicates a neutral to slightly overbought condition. Currently, the RSI is moving downward towards the oversold territory, which is another sign that the current long-term upward trend may be coming to an end.
This analysis suggests that while there has been a recent upward trend, caution is advised as indicators show potential signs of a reversal.
5. Summary
MetisDAO presents a compelling solution to the blockchain trilemma by enhancing scalability, speed, and cost efficiency through its Layer-2 platform. The utilization of Optimistic Rollups and EVM-compatible virtual machines has positioned MetisDAO as a significant player in the Ethereum ecosystem. The approach of reducing gas fees and transaction times while maintaining robust security has made it attractive for decentralized applications and businesses.
Given the recent developments, Metis is positioned for further growth. While the long-term prospects remain promising, potential investors should stay cautious of market conditions and technical indicators. Investors should be prepared for possible declines. The price target is $42, but if the price drops even further, a reassessment will need.
Reference
https://coinmarketcap.com/currencies/metisdao
https://www.tradingview.com/chart/og9Xv9DU
https://beincrypto.com/learn/metis-crypto
https://en.bitcoinhaber.net/metisdao-enhances-blockchain-efficiency
https://blockchainreporter.net/metis-teams-up-with-codatta-transforming-blockchain-analysis-with-ai
https://cointelegraph.com/news/metisdao-tvl-surges-by-99-800-as-the-layer-2-race-heats-up