30 May 2022
2 min read
Blockchain, crypto, NFTs, metaverse, and decentralized finance have all picked up steam in the latest years of their potential and capacity to redefine how we interact with the world. With the continued implementation of these new technologies, outdated systems are beginning to crumble.
Since 2018, Decentralized Finance (DeFi) has been the talk of the world of cryptocurrencies for various obvious reasons. DeFi is a permissionless innovation, a goal for greater financial inclusion, and procedures underlying wealth sovereignty. At the same time, another technological advancement in the shape of the metaverse has risen.
Binance has unveiled MetaFi, a novel concept aiming at tapping into the infrastructures required to support virtual economies that operate in parallel with the real world.
What? What does that even mean? To understand this further, keep reading.
The Concept of MetaFi
MetaFi is an amalgamation of two words: metadata and DeFi. MetaFi is a new paradigm shift that seeks to standardize blockchain technology for large-scale Web2 applications such as games, networking sites, and the metaverse. It would result in a unified standard that would aid inaccessibility. The goal is to create a common blockchain standard that improves interoperability across virtual worlds by bringing everything together.
The convergence of these multiple crypto primitives enables a full-fledged parallel economy that uses blockchain to supply people around the world. MetaFi, a combination of meta and DeFi, aims at building metadata and other technology standards for use across networks, such as NFT and gaming metadata standards.
Even though many of these applications will be used in the metaverse, the word Meta can be taken as “all-encompassing” or “a means to an end,” rather than an acronym for the metaverse.
How does MetaFi Work?
MetaFi harnesses the presence of metadata to facilitate interoperability for assets on most blockchains in development. A link to the allied image is in the metadata of an NFT, for example. You can also link metadata to a bitcoin (BTC) transaction, allowing you to add more encrypted information.
Any blockchain, however, will make assets machine-readable. The sortable is achieved by useable metadata standards. If all blockchains display their metadata in the same way, an NFT marketplace development might try to examine and sort NFTs from many blockchains.
What Challenges does MetaFi Face?
Because MetaFi may be regarded as an all-encompassing ecosystem centred on information widely used in virtual reality, it has a set of software and hardware requirements. These limitations present difficulties not only for those who are developing the MetaFi but also for users and gamers who want to participate in it.
- The MetaFi NFT interplay is the most massive obstacle for Metaverse DeFi convergence. For buying, selling, or borrowing against an NFT, owners must have a strong insight into its value. NFT appraisals, on the other hand, are a point of anxiety for lenders.
- The fractionalization of NFT in diverse MetaFi crypto applications brings a whole new set of legal and governance concerns.
- Furthermore, merging DeFi with metaverse is complicated by the diverse standards used by different blockchain networks.
The Bottom Line
MetaFi is a groundbreaking novel phenomenon in crypto with practically limitless applications. This concept is required to spawn even more MetaFi applications and more creativity in the crypto realm, whether in the metaverse, gaming, or other sectors, even if we are still a long way from seeing it, thoroughly implemented and widely used.