Q2.2022 Review from MetaMask Institutional

“For the times they are a-changin” – Bob Dylan

It is a difficult endeavour to summarise what has been a truly profound quarter within institutional crypto, Web3 and for MetaMask Institutional (MMI). The market dislocations of the first quarter only accelerated. In addition, we have experienced events over the last 90 days that are bound to have far-reaching impacts for years to come. Yet, if anything, this quarterly update should provide an overview of just how bright the institutional Web3 future is and what MMI is doing to build it.

Before dedicating what is now the majority of my career to the art and science of product and user experience, I spent seven years as a global macro investment manager. My career started in 2008, a profound time to cut one’s teeth. To this day, I have countless stories of that period. From seeing experienced finance veterans in deep states of paralysis and shock, unable to make decisions, to observing the ostrich effect in action as trading desks changed television channels, from CNBC to the Beijing Olympics. I experienced financial instruments, markets, and market fundamentals breaking in ways no one thought possible.

Starting an investment management career in 2008 felt like arriving at a seat at the table to a game that was ending. My mentor at the time was a deeply experienced macro commodity trading advisor and equity trader. Hence, risk management and Austrian economics were drilled into me from a young age. Most people in crypto have an origin story, and this period deeply contributed to mine. Markets change, asset classes change and financial instruments change. Human behaviour, and risk management, does not.

“The reports of my death are greatly exaggerated” – Mark Twain

It is with this experience, coupled with a career dedicated to building technology revolutionising financial access, that I now look at the current crypto market dislocations and draw different conclusions to current market narrative. No, Web3 is not having its 2008 moment. Extreme leverage, coupled with opaque black box balance sheets, and obfuscated risk positions are the consequences of centralised entities. Coupling this with human behaviour and cognitive biases, makes the perfect argument for the importance of decentralisation and Web3.

As Naval Ravikant noted, “The test of any good system is to build the system and turn it over to your enemies to run for ten years.” Web3 provides a better system. DeFi is not just an asset class for institutions to allocate to. It’s a new financial system for the Web3 economy. A system that offers more transparency, digital authority and a fundamentally better way to create, store and transfer value. With value accruing to the contributors and token holders while offering near instant-settlement.

Crypto is truly filled with, and keeps attracting, the most talented and brilliant builders. Anyone who spends time in this space soon recognises that the optimism and innovation cycles are second to none. Hence, every bull market drives greater adoption and every bear market brings with it the next wave of paradigm-shifting innovations. Arriving into Web3 in July 2022 would, and should, feel like arriving at a game that is just starting.

It is MMI’s mission to bridge every organisation in the world into Web3. We exist to be of unrivalled value and service to our users. Hence, we follow product, design and user research principles that define how we build products from zero to one that our users can’t live without. We believe safety, security and trust are some of the first-principles to ensure mainstream organisation adoption. We recognize as far as Web3 has come, we have much to do to ensure that we build products and user experiences that drive the crossing of the chasm. And we’re just getting started.

“A special time, in a special place with a special group people” – Pat Berarducci

The second quarter of 2022 was a profound period for MMI. Despite crypto markets falling 60% on average, we continued to grow double digits week-on-week throughout the period. In this quarter, we announced our next set of custodian partners; attended the Paris Blockchain Summit, Crypto Bahamas, Permissionless, Consensus, Battlefin, NFT.NYC and ETH NYC; and won a Hedgeweek award. We ran our first Twitter space and spoke on several different podcasts. We also held the first MMI Offsite. Most importantly and fundamentally, we shipped meaningful features with great user experiences to solve the most salient needs for our user. Hence, this update reflects all the incredible work of the entire MMI team. A special group of people.

“Step 1 is to build something that users love.” – Sam Altman

Over the quarter, we delivered on several important initiatives across the experience teams building MMI. Within our wallet and custodian integrations team, we completed two custodian integrations as we continue to work with world class partners in different jurisdictions offering different key management solutions to cater to the different needs of all organisations. We also launched our integration with Safe, offering unrivalled access to Web3 and treasury management with our portfolio dashboard for decentralised autonomous organisations (DAOs), a user group we are extremely passionate and excited about.

On top of a range of user experience and design updates in the extension, we also launched transaction notes. This feature gives organisations the ability to provide notes and context around their transactions. These notes will appear within custodian user interfaces to assist stakeholders in the signing process. From our product discovery process, we found that a continued pain point for our users was the extra layer of required communication through third-party channels to describe and provide assurance around a transaction. Transaction notes eliminate the additional time users spend to provide details of their trades, and simplify the overall process. Over the quarter we recorded engagement and retention metrics that were over three times the industry-average.

Within the MMI Portfolio Dashboard, we rolled out a range of features and updates. In terms of a delightful user experience, we increased loading speed by tenfold, increased our protocol coverage, and improved the asset allocation layout. We shipped portfolio filtering at the account and protocol level, and added protocol and sector breakdowns to provide richer context around a portfolio’s positions.

Our biggest focus for the quarter however was to address two of the biggest pain points we hear from our users — a fragmented NFT experience for the institutional user, and reporting.

We believe NFTs is a profoundly important sector within Web3. Yet, the institutional user experience is completely broken. Organisations are often multi-custodian, have multiple accounts per custodian, hold multiple NFTs per account, and then transact or use multiple different marketplaces. This results in fragmentation at every layer of the stack.

Over the last quarter we spent weeks speaking with different organisations that buy, hold and trade NFTs to understand how they are allocating to this digital asset. We dove into where their pain points lay and what was the paramount information that drove their day-to-day processes and decision making. Accordingly, we built MMI’s NFT Tracking View, and launched it at ConsenSys Connect’s event in Times Square. The MMI NFT tracking view unifies all the fragmentation institutions face, providing a consolidated view of all their NFT holdings, across custodians, accounts and marketplaces.

Reporting is another key, and difficult aspect of Web3. We meet with our users daily and hear about the hours they spend explaining their transactions to their third-party service providers. Valuations are done with manual screenshots and transaction history downloaded from block explorers. Reporting and valuations also closely ties into profit and loss, net asset values and performance. Today, there are very few providers that provide accurate Web3 reporting capabilities.

Over Q2, we built and launched valuation and read-only data sharing capabilities in our portfolio snapshot feature, providing accurate valuations across all EVMs in token, DeFi positions and NFTs. Our portfolio snapshot feature automatically creates weekly, monthly and quarterly valuations and transaction history that can be shared in read-only format to third-party service providers. With data also downloadable to CSV, it also lays the foundation of building our Web3 attribution capabilities in the upcoming quarter.

Given the current state of crypto markets, and the start of the summer in the US and Europe, I suspect the next quarter might be subdued compared to previous years. Nonetheless, MMI will have important product updates, along with several public announcements. As we continue to focus on bridging every organisation on the earth into Web3, we believe now is the absolute best time to build.