MetaMask is a software cryptocurrency wallet for the Ethereum blockchain. The platform is the brainchild of Ethereum blockchain advocate Joseph Lubin. The MetaMask wallet is available as a Chrome or Firefox browser extension. Alternatively, it can be accessed through an app. MetaMask makes money on swap fees when users compare or swap Ethereum-based tokens. The company also charges management fees to institutions that desire a more seamless DeFi investment experience.
MetaMask origin story
MetaMask is a software cryptocurrency wallet for the Ethereum blockchain. The platform was created by American blockchain software technology company ConsenSys in 2016.
ConsenSys in turn was founded by Joseph Lubin, a champion of Ethereum’s ecosystem construction responsible for more than 50 well-known growth projects. Lubin is also thought to be a multi-billionaire after being one of the biggest buyers of Ether during its initial crowdfunding.
Essentially, ConsenSys is a start-up studio that incorporates and launches Ethereum-based businesses and provides technology services to other companies. One such business was MetaMask, which was launched in July 2016 and developed by former Apple engineers Aaron Davis and Dan Finlay.
Though uptake was initially sluggish, MetaMask benefitted from the CryptoKitties NFT craze and the increased publicity around cryptocurrency in general. The wallet, which allowed users to exchange and store Ethereum-based tokens, surpassed 1 million downloads in early 2018. Beta versions of an app for Android and iPhone arrived just over a year later.
During the summer of 2020, MetaMask achieved the magical mark of 1 million active monthly users. This number was largely facilitated by the increased usage of DeFi protocols including Yearn Finance, Curve, and MakerDAO.
Today, MetaMask is known as the most useful Ethereum open-source wallet in the world, enabling users to manage their Ethereum assets easily. The platform now boasts more than 10 million monthly active users, with the surge in popularity coming from developing nations such as Vietnam and Nigeria.
How does MetaMask work?
The MetaMask wallet is installed as a Chrome or Firefox browser extension. Alternatively, it can be accessed through an app.
The sign-up process requires the user to come up with a password, after which they will be shown twelve so-called “seed words” that they must remember. These words are used if a password is forgotten.
Users can then deposit or send currency and are protected by a private key which is stored locally on their computer. For near 100% security, the MetaMask wallet can be connected to hardware wallets such as Ledger and Trezor.
How does MetaMask make money?
MetaMask revenue generation occurs via swap fees, management fees, and merchandise sales. Let’s take a look at these in more detail below.
Swap fees
Most company revenue is derived from swap fees, which are charged when users compare and swap tokens within MetaMask itself.
A swap fee, or service fee, of 0.875% is automatically factored into each quote. This feature combines data from decentralized exchange aggregators and market makers to ensure network costs are minimized.
Management fees
MetaMask also makes money from MetaMask Institutional, a wallet designed for trading firms and other financial organizations.
MetaMask Institutional offers the same functionality as the consumer wallet, but it also provides access to qualified custodial platforms that help the business make DeFi investments. This is done without comprising operational efficiency, compliance requirements, or institution-required security.
Management fees for this service are undisclosed.
Merchandise sales
Lastly, the company makes money by selling branded merchandise in its online store.
Items for sale include t-shirts, hats, mugs, activewear, and apparel for pets such as dogs.
Connected Business Concepts
According to Joel Monegro, a former analyst at USV (a venture capital firm) the blockchain implies value creation in its protocols. Where the web has allowed the value to be captured at the applications layer (take Facebook, Twitter, Google, and many others). In a Blockchain Economy, this value might be captured by the protocols at the base of the blockchain (for instance Bitcoin and Ethereum). However, according to blockchain investor Paivinen due to ease of forking, incentives to compete and improved interoperability and interchangeability also in a blockchain-based economy, protocols might get thinner. Although the marginal value of scale might be lower compared to a web-based economy, where massive scale created an economic advantage. The success of the Blockchain will depend on its commercial viability!A Proof of Stake (PoS) is a form of consensus algorithm used to achieve agreement across a distributed network. As such it is, together with Proof of Work, among the key consensus algorithms for Blockchain protocols (like the Ethereum’s Casper protocol). Proof of Stake has the advantage of security, reduced risk of centralization, and energy efficiency.A Proof of Work is a form of consensus algorithm used to achieve agreement across a distributed network. In a Proof of Work, miners compete to complete transactions on the network, by commuting hard mathematical problems (i.e. hashes functions) and as a result they get rewarded in coins.Non-fungible tokens (NFTs) are cryptographic tokens that represent something unique. Non-fungible assets are those that are not mutually interchangeable. Non-fungible tokens contain identifying information that makes them unique. Unlike Bitcoin – which has a supply of 21 million identical coins – they cannot be exchanged like for like.A Blockchain Business Model according to the FourWeekMBA framework is made of four main components: Value Model (Core Philosophy, Core Values and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics/incentives through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.Ethereum was launched in 2015 with its cryptocurrency, Ether, as an open-source, blockchain-based, decentralized platform software. Smart contracts are enabled, and Distributed Applications (dApps) get built without downtime or third-party disturbance. It also helps developers build and publish applications as it is also a programming language running on a blockchain.The Graph is an ERC20 Utility Token (built on top of Ethereum) to enable consumers to freely query the blockchain through a fully decentralized database kept by indexers, incentivized by the payment of tokens (called GRT). The network is also ministered by curators and delegators that help maintain a high-quality index.BAT or Basic Attention Token is a utility token aiming to provide privacy-based web tools for advertisers and users to monetize attention on the web in a decentralized way via Blockchain-based technologies. Therefore, the BAT ecosystem moves around a browser (Brave), a privacy-based search engine (Brave Search), and a utility token (BAT). Users can opt-in to advertising, thus making money based on their attention to ads as they browse the web.In 2012, co-founders Christian Larsen and Jed McCaleb created Ripple, a technology acting as both a pre-mined cryptocurrency called XRP and a digital payment platform enabling monetary transactions. Where Ripple is the tech company, XRP is the decentralized ledger.In 2014, Jed McCaleb – which also played a key role in the development of Ripple – created a cryptocurrency to provide fast, reliable, and affordable money transactions. The same cryptocurrency has considerably grown seven years later. It is now one of the most stellar cryptocurrencies to provide a real-time platform that links banks, payment systems, and people. Meet, Stellar!In early 2019, a joint project between TRON and BitTorrent Foundation called BitTorrent Token came to fruition. BitTorrent Token launched to tokenize in-demand file-sharing protocol and enhance content delivery and bandwidth accessibility with blockchain technology.Chainlink is considered the most established decentralized oracle network. As an ecosystem housing several decentralized oracle networks running simultaneously. As a decentralized oracle service built on Ethereum, Chainlink has the power to support the development of blockchain solutions for both traditional businesses and enterprises.Uniswap is a renowned decentralized crypto exchange created in 2018 and based on the Ethereum blockchain, to provide liquidity to the system. As a cryptocurrency exchange technology that operates on a decentralized basis. The Uniswap protocol inherited its namesake from the business that created it — Uniswap. Through smart contracts, the Uniswap protocol automates transactions between cryptocurrency tokens on the Ethereum blockchain.In essence, Polkadot is a cryptocurrency project created as an effort to transform and power a decentralized internet, Web 3.0, in the future. Polkadot is a decentralized platform, which makes it interoperable with other blockchains.Designed and created as an alternative to Ethereum, Cardano claims to be the first decentralized blockchain protocol to use a scientific approach and undergo a peer evaluation.Solana is a blockchain network with a focus on high performance and rapid transactions. To boost speed, it employs a one-of-a-kind approach to transaction sequencing. Users can use SOL, the network’s native cryptocurrency, to cover transaction costs and engage with smart contracts.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
