Q1.2022 Review from MetaMask Institutional

“Nothing is More Powerful than an Idea Whose Time has Come” – Victor Hugo

Hello Friends, Funds, and DAOs,

As many if not most of you would know, Institutional Crypto is all-consuming. However, as my previous update denoted, my aim is to pause and provide a reflection on a quarterly basis, noting the features released and product milestones achieved within MetaMask Institutional (MMI).

Since the ICO days of 2017, there has often been a continued narrative of institutions investing in what is now called Web3. Yet, institutional capital was relatively elusive for the first few years. The DeFi summer proved that this time was different, and what we have seen over the last two years is an avalanche of VC, Crypto Fund and Hedge Fund capital flooding into Web3 and DeFi. Also, we have started to see more and more traditional organisations allocating to NFTs. As the great Marc Andreessen noted, software is eating the world. Perhaps, we would add a modifier: Web3 is eating the world.

“It was the best of times, it was the worst of times” – Charles Dickens

This first quarter of this year marked another profound period—Sadly, mired in international conflict. Geopolitical uncertainty, threats of high inflation, and stagnant economic growth impacted digital assets over January and February. Yet, despite these extreme conditions, we continue to see robust institutional flows into our ecosystem. New funds are being raised, traditional finance is starting to invest more, and organisations of all stripes are taking steps into Web3. From MMI’s purview, we experienced record growth across all regions in Q1 along with record assets invested into DeFi by TVL.

“The future is already here – it’s just not evenly distributed” – William Gibson

Web3 is a paradigm shift. A better way to organise society. DeFi, for example, offers capital markets that are interoperable and transparent with near-zero costs and instant settlement. NFTs are a profound way to create and store value. Underlying these products are smart contracts and ERC standards and the first principled value and philosophy of decentralisation. An idea whose time has come. Given this wave of innovation, our goal within MetaMask Institutional is to bridge every organisation on planet earth into Web3.

To create a mental model, we see Web3 as the Southbank of London or the island of Manhattan—With most institutions living in Web2 on the Northbank, or other islands metaphorically speaking. In order to ferry institutional traffic from Web2 to Web3, we build more bridges (i.e. integrations with world-class custodians) to connect these two worlds. We fortify our bridges with features to serve the needs of institutional traffic (i.e. our Portfolio Dashboard, KYT risk management, and detailed reporting). We are also seeing an explosion of new organisations (DAOs) born in Web3, with similar institutional needs—And we also look to offer our bridges to these entities to connect them to the ever-increasing opportunities that DeFi provides.

“We need a product that our customers love” – Marty Cagan

Over the quarter we delivered on three key initiatives; All with the aim to increase the number of bridges and fortify them with institutional features.

Unrivaled EVM access and bridging for custodial accounts

MMI—like the original non-custodial MetaMask wallet—offers its users access to DeFi and Web3 across all EMV-compatible chains. MMI differs from the original MetaMask in that it is a custodial wallet. This means that custodians and custody technology providers facilitate key storage, key management, transaction signatures, and transaction broadcasting for MMI users, in line with institutional regulations.

Given that it is the custodians who broadcast the transactions—the actual EVM chain access of MMI users is determined by the chains supported by their custodian. In practice for example, if a custodian only supports transactions on the Ethereum mainnet and Polygon network, then an MMI user would be limited to transacting across these two chains. Accordingly, we rolled out our multi-chain feature that will support our custodian partners in rolling out more EVM chain access. This will give custodians the capabilities to add, sign, and broadcast any custom RPC URL specified by the user—making the rollout of new EVM chain support much easier.

The ability to bridge assets is a fundamental institutional need within DeFi. This entails performing a cross-chain swap by depositing an asset into a bridge contract in one chain and then receiving minted assets on another chain. Bridging allows the ability to move assets to APY and unlocks yield farming opportunities across EVM chains.

Based on the way many custodians are architected meant that MMI, historically, has connected one account to one network. This means that institutions would set up an account at a custodian and then have that account tied to a particular network, for example, Mainnet or Polygon. This one to one relationship, although providing access, prevents the bridging of assets. For assets to be bridged, the address used to deposit tokens into the bridge contract must be the same to receive the minted tokens.

With our multichain feature, we removed the connection between accounts and networks historically held by custodial accounts. This means that similar to MetaMask, custodial accounts on MMI will be available across multiple networks. As our custodian partners roll out more EVM-chain support, users will automatically have access to accounts on these chains, with no additional work required from either party—allowing for the bridging of assets across chains.

Standardized custodian integration architecture

To address the different custody needs of all organisations seeking to enter the DeFi and Web3 space, MetaMask Institutional practises custodian-agnosticism. This means we work with multiple custodians that offer different custody technology stacks. It is our goal to ensure that the integration of any custodian is fast, seamless, and requires the lowest development effort possible.

At the start of January, we launched our V2 JSON-RPC API Integration Architecture.

This latest version allows us to compress integration steps and dramatically simplify the onboarding of new custodians by standardising our integration stack. We have also aligned the API custodians need to build with the JSON-RPC API, an open-source standard.

While integration still requires minimal bespoke work from the MMI team, new custodians can now integrate with a standard API and client. This movement towards a “self-service” model has allowed for multiple custodians to integrate simultaneously during the last quarter.

In addition, aligning our custodian API with an open-source JSON-RPC standard transforms our stack into a platform that developers can build and innovate on top of. It also aligns MMI’s architecture closely with that of MetaMask and Infura. With the JSON-RPC API, custodians could eventually write snaps for MMI and MetaMask while Infura developers can build and launch custodians and custodian services.

The Portfolio Dashboard

At the start of the quarter, we launched the MMI Portfolio Dashboard. A new canvas upon which we can build tailored institutional user experiences. We see this dashboard as another bridge and, eventually, an execution layer to Web3. The Portfolio Dashboard is a special privileged dapp. It recognises MMI wallets and then brings in all your accounts (Default, Hardware Wallet and Custodial) to provide a consolidated view of all your holdings across all EVMs. As Reid Hoffman noted, if you are not embarrassed by the first version of your product, you’ve launched too late. Standing on principles, our initial launch showed token holdings and historical balances across Mainnet, Polygon and BSC. A minimal viable product if you will.

Over the quarter we rolled out a series of dramatic improvements to the Portfolio Dashboard. Today, we show pool balances and DeFi holdings across all EVMs with token, lending and borrowing LP, farming, leveraged farming, rewards tokens, governance, staked and yield and other positions. We also provide detailed lending and borrowing positions including APYs, APRs, health factors and interest earned and owned. Lastly, we rolled out CSV downloading of transaction history. We ended the quarter with a minimum lovable product. One that only contains a true consolidated view but offers great UX and design with minimal latency.

Next, we will be rolling out detailed NFT views and LP positions, along with updating our CSV download with more granularity. We also have many features planned over the Q2 and Q3 as we build our Portfolio Dashboard into a product users can’t live without.

“Strive not to be a success, but rather to be of value.” – Albert Einstein

As noted previously, we follow strict product and design principles within MMI, identifying what we define as tier-1 user needs. Painkillers over vitamins if you will. One of our product principles is to get outside of the building (thus many of you have been on calls with us). We thank you for your dedicated time. We follow the principles of continuous discovery and pay close attention to your voice. Our goal is to be of service and value to you and to build products and experiences that you can’t live without. This coming quarter you will see a series of features in service of your voice. Along with a few important public announcements. As we further entrench our mission of being a bridge for all organisations, while further adhering to our decentralisation values.

Sincerely, Johann Bornman

Global Product Lead, MetaMask Institutional