Little Fox MetaMask: The Main Gateway to the Ethereum World

This article is from ChainNews, authored by Pan Zhixiong.

As one of the oldest and most popular wallet tools on the Ethereum platform, the question "When will MetaMask issue its token?" is frequently asked. Now, rumors about MetaMask's upcoming token issuance have resurfaced. Although ConsenSys, the Ethereum incubator that developed the MetaMask project, denied the rumors about an imminent token issuance, do you really know enough about this Ethereum gateway with 1 million monthly active users?

MetaMask was initially incubated by ConsenSys and later became the only entry-level product directly facing end users among ConsenSys's six major product lines, highlighting its strategic importance.

However, as an open-source wallet tool, it theoretically does not have any special technical barriers. But due to its first-mover advantage, MetaMask possesses the most crucial resource that other similar products cannot compete with—up to 1 million monthly active users. Throughout its long development history, MetaMask has not sought its own business model until now, when it has finally found some direction: directing user resources into a new on-chain financial service called "MetaMask Swap," providing users with convenient trading tools while extracting a portion of the trading commission as revenue.

From the trading data in the three months since its launch, MetaMask Swap's business has grown rapidly. According to an on-chain address tracking the accumulated revenue of MetaMask Swap, as Ethereum prices soared, the service has generated over $2 million in revenue to date.

Why do we need MetaMask?

In simple terms, MetaMask is an "Ethereum gateway accessible via a browser," or a tool that allows users to interact with the Ethereum network at a lower threshold. Its essence is a private key manager, but through it, users can directly participate in various on-chain financial applications (DeFi), games, domain names (ENS), cross-border payments, and more.

For a blockchain network, the safest way to participate is for everyone to run a full node, not trusting any third-party data but verifying all data themselves. However, for the current Ethereum network, the operating cost of a full node far exceeds what an ordinary home computer or mobile phone can bear.

Therefore, for ordinary users, a lightweight access method is needed, while not having to worry too much about security issues, which is the main entry point for MetaMask. Data that originally required reliance on building a full node can be accessed through MetaMask by connecting to other trusted third-party data sources—such as connecting to Infura, a platform for developers under ConsenSys. Of course, users with higher security requirements can also designate their own full node as the access point for MetaMask.

MetaMask interface

For ordinary users, MetaMask has become the primary gateway to the Ethereum world. MetaMask supports the most popular desktop browsers, and users only need to download the extension from the browser's plugin store, complete the initial setup, save or import their private keys or mnemonic phrases, and then they can access decentralized applications (DApps) on Ethereum and interact with them.

How did the little fox come to be?

MetaMask has always been affectionately referred to as "the little fox" by users. This project originated in 2015, when Ethereum had just launched its mainnet, and there were almost no choices in the market besides official wallets and browsers like Mist.

Aaron Davis (codename Kumavis) is the founder and main developer of "the little fox," and ConsenSys and the Ethereum Developer Fund (Ethereum DEV Grants) jointly supported the early development of this project.

Kumavis conducted a major public introduction of MetaMask at the Ethereum Developer Conference DEVCON 1 in London in 2015, when the front-end interface was still in a relatively early stage.

Kumavis introducing MetaMask at DEVCON 1

Interestingly, in early videos of MetaMask, Kumavis stated that MetaMask is not only a self-hosted Ethereum browser but also an identity management tool—this is because at that time, the terminology habitually referred to Ethereum's "address" as "identity," which is an account that can be used to store assets and interact with smart contracts.

As the user base gradually grew, MetaMask became an independent product line under ConsenSys. However, it wasn't until last April that MetaMask was officially added to the product line classification on the ConsenSys homepage.

MetaMask moves to mobile

Perhaps because the development iteration of browser plugins can be faster, or perhaps because overseas users are not as "mobile-first" as Chinese users, MetaMask only had a Chrome browser plugin version for the first few years, and later gradually supported other browsers like Firefox.

MetaMask's early website

In February 2019, according to data from the Chrome Web Store, MetaMask's installation surpassed 1 million.

Now, MetaMask is no longer just a browser plugin wallet; it has expanded into a fully functional, cross-platform tool. In 2018, MetaMask supported hardware wallets like Ledger and Trezor, allowing these hardware wallets to perform functions and experiences similar to software wallets, such as viewing assets and signing transactions.

In 2019, MetaMask finally launched a beta version of its mobile wallet, covering both iOS and Android versions. After about a year of testing, the official mobile version was finally released in the second half of 2020, launching on the Apple App Store (non-China region) and Google Play Store.

In October 2020, MetaMask announced that its monthly active users exceeded 1 million, representing an increase of over 400% compared to December 2019. Among mobile users, the top four countries were the United States, India, Nigeria, and the Philippines. MetaMask stated, "The recently launched MetaMask mobile app has played an important role in attracting new users."

Supports not only the Ethereum mainnet but also testnets and other chains

In addition to the Ethereum mainnet, many of MetaMask's users come from testnets and other blockchain networks (such as the Ethereum sidechain xDAI).

Many early Ethereum applications choose testnets like Ropsten or Kovan for testing. For developers and ordinary users, MetaMask is the most convenient entry point. For example, previously, MCDEX tested a decentralized futures exchange based on the Arbitrum Rollup network launched by Offchain Labs, and users could easily set up MetaMask to connect to this specific network for testing.

Additionally, xDAI is also one of the recently popular blockchain networks, and MetaMask can easily connect to the xDAI network. xDAI is a sidechain that is almost compatible with Ethereum but improves network throughput by changing consensus and uses the stablecoin DAI as the settlement currency.

Dark Forest game interface

For instance, the decentralized real-time strategy game "Dark Forest," built on zero-knowledge proofs, switched from the Ethereum testnet to the xDAI network in its last version, where users need to pay a small fee to explore the universe. However, it seems that this game may ultimately not launch on the Ethereum mainnet due to its high-frequency trading operations and the currently high Gas costs, so it is likely to remain on xDAI or choose Layer 2.

Moreover, there are many experimental projects based on xDAI, such as Circles UBI, Gnosis, 1Hive, POAP, etc., and MetaMask is also the main entry point for these applications.

Seeking a profit model

As a private key management tool, MetaMask must be open-source to demonstrate its security, following industry conventions. For such an infrastructure tool, how to ensure its sustainable development is a challenge for ConsenSys.

For a long time, MetaMask did not attempt any monetization or profit-making methods. This is somewhat akin to the approach in the internet industry, where one first accumulates reputation, users, and traffic, and then explores business models.

However, the situation changed at the end of last year. In October, MetaMask launched its aggregation trading feature, MetaMask Swaps, mirroring the monetization methods chosen by mobile wallet imToken (which launched Tokenlon), smart contract wallet Argent (which has aggregation trading features), and the wallet Monolith (which integrated Paraswap) that launched a physical payment card.

MetaMask Swap user interface

MetaMask Swap aggregates quotes from multiple decentralized liquidity sources, including Uniswap, Airswap, Kyber, 0x API, 1inch, dex.ag, Paraswap, Totle, and private market makers, to ensure users trade tokens at the best prices.

After all, monetization through financial services is very direct and is also a fundamental need in the industry. MetaMask generates revenue through trading commissions, taking 0.875% of each transaction amount as income—this commission rate is higher than the industry average.

According to on-chain address tracking, we found an address specifically used to collect MetaMask Swap revenue, which has accumulated over $2 million in commission income in about three months. It is worth noting that in the first 10 days after the feature was launched, it only accumulated $3,000 in revenue, so the growth rate is quite remarkable. However, another factor that cannot be overlooked is that the price of ETH held by that address has also seen a significant increase recently.