Metis Q1 2024 Brief

Key Insights

• The Metis Decentralized Sequencer was launched on March 14. It is operated by the Metis Foundation and select partners, ensuring increased transparency and reducing risks related to censorship and MEV.
• Active addresses and transactions increased by 250% and 260% QoQ, respectively. The increase in activity followed the increased attention from Metis’s Q4 2024 price spike.
• Metis TVL was $100 million (+37% QoQ). Two new protocols — WAGMI and Hercules — quickly ascended to the top five protocols by TVL.
• The Metis Ecosystem Development Fund was established with 4.6 million METIS ($450 million) to support the development and expansion of the Metis ecosystem.

Primer

Metis (METIS) is an Ethereum Layer-2 Rollup that offers simple and fast smart contract deployment within the network. Metis offers a plethora of products to blockchain developers including the Metis NFT Bridge, Oracles, Nodes, Data Indexers, and a SubGraph. The platform supports a wide range of decentralized applications and enterprise-level use cases, facilitating a friendly experience for both developers and end-users.

The native token of the Metis ecosystem is METIS, which serves multiple purposes within the network. It is used for paying transaction fees, staking, and participating in governance processes.

A distinctive feature of Metis is its decentralized sequencer. This system employs dual sequencers operated by the Metis Foundation and select partners, ensuring increased transparency and reducing risks related to censorship and MEV. This architecture enables Metis to offer a robust solution for developers looking to build scalable decentralized applications while maintaining close alignment with Ethereum's secure infrastructure.

Key Metrics

Analysis

Over a four-week period starting in late December, METIS’s market cap surged by 400%. The parabolic move then steadied, and METIS’s market cap steadily rose through the rest of Q1 2024. METIS ended Q1 2024 with a circulating market cap of $520 million (+34% QoQ), while the fully diluted market cap rose to $966 million (+18% QoQ). METIS's market cap ranking is approximately 200th among the entire crypto market. Within the Ethereum L2s, it is ranked as the eighth largest by market cap.

The circulating supply of METIS expanded to 5.4 million, representing a 14% QoQ inflation increase (55% annualized). This expansion is responsible for the delta between the circulating and fully diluted market caps. Metis has a maximum total supply of 10 million METIS; therefore, 54% of the supply is now in circulation.

Metis reported revenue of 20,000 METIS (+323% QoQ). The revenue in USD increased to $2 million (+1,100% QoQ) or $8 million annualized. This surge was driven by increased transactions and a rise in the average transaction fee from $0.07 to $0.23. Notably, Metis saw a massive spike in revenue on January 18th and 19th with $325,000 and $737,000 respectively.

Metis's network activity showed growth, with daily active addresses increasing by 250% to 6,100, daily new addresses growing by 321% to 2,100, and daily returning addresses rising by 219% to 4,000. The increase in activity followed the increased attention from Metis’s Q4 2024 price spike.

The developer community includes a total of 113 developers, with 37 full-time and 65 part-time contributors. In December 2023, the Metis Ecosystem Development Fund was established with 4.6 million METIS ($450 million) to support the development and expansion of the Metis ecosystem. In January 2024, the Metis Foundation committed 250,000 METIS for ecosystem grants, all of which are committed solely for 2024, and launched the MetisEDF Grant Tracker for grant transparency. WAGMI was the first Metis Development Fund recipient.

Metis capitalized on the increased attention with a series of announcements:

• Integrations with multiple interop protocols including Chainlink CCIP, OMNI, Connext, and renewed incentives with Synapse.
• Launch of DeFi Kingdom's PvP game, DFK Colosseum, on Metis.
• Adoption of EigenLayer for data availability.
• Liquidity staking enhancements on Metis through Renzo.
• Metis announced it has 100 Verified Projects.
• On March 11, 2024, Binance announced the listing of METIS.

The Total Value Locked (TVL) in USD on Metis was $100 million (+37% QoQ), and the TVL in METIS was 1 million METIS (+17% QoQ). Both TVL USD and TVL METIS increased, indicating an inflow of value into the network.

The leading DeFi protocols on Metis include Aave, which is the largest with a TVL of $56 million, showing a 57% increase QoQ. The next largest protocols, Netswap and Maia Dao, experienced outflows with Netswap’s TVL down 7% QoQ to $9 million, and Maia Dao’s TVL down 40% QoQ to $9 million. There were two notable protocol launches in Q1 2024: WAGMI and Hercules. WAGMI, founded by Daniele Sesta, is a DEX with novel liquidity provision strategies, arbitrage bots, and liquidity management, and will introduce perps. Hercules, launched on March 18, 2024, features a dynamic AMM, concentrated liquidity, and yield-generating NFTs. Both projects were backed by the Metis Ecosystem Development Fund.

Metis's stablecoin market cap has been extremely stable over the past year, showing a slight increase to $43 million (+2% QoQ, -5% YoY). USDC and USDT are the leading stablecoin, with USDC holding a market cap of $21 million (49% of the total) and USDT at $16 million (37% of the total). Combined, they account for nearly 90% of Metis's total stablecoin market cap. Metis ranks approximately 30th among chains by stablecoin market cap.

Decentralized Sequencer

The Metis Decentralized Sequencer was launched on March 14, 2024. This system is operated by the Metis Foundation and select partners, ensuring increased transparency and reducing risks related to censorship and MEV. The development process involved extensive community testing, with over 300,000 contributors handling 11 million transactions.

Metis initiated Phase 2 of the Decentralized Sequencer upgrade on April 8. This phase introduces enhancements such as multi-transaction blocks and a robust transaction pool, designed to improve network liveness and censorship resistance, and Sequencer Rewards. The roadmap includes integrating strategic partnerships, with upcoming features such as a 20% Mining Reward program.

Closing Summary

Following an explosive increase in market cap at the end of 2023, Metis continued to succeed in Q1 2024, as demonstrated by several key performance indicators. The network's active addresses and transactions increased by 250% and 260% QoQ, respectively, revenue surged by 1,100%, and DeFi TVL grew by 37% to $100 million. This growth was mirrored by a steady increase in market cap throughout the quarter, culminating at $520 million.

Additionally, Metis formed multiple notable partnerships with Omni, Eigen, Synapse, Connext, and Chainlink. Two new protocols, funded by the Metis Ecosystem Development Fund — WAGMI and Hercules — quickly ascended to the top five protocols by TVL. Most notably, Metis launched the long-awaited Decentralized Sequencer on March 14.

Looking ahead, Metis aims to maintain its momentum by attracting more users, funding additional projects through the Ecosystem Fund, and further decentralizing the network with ongoing enhancements to the Decentralized Sequencer.

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