Metis (METIS): Smart Layer 2 for Cost-Effective Scaling on Ethereum

When the Ethereum (ETH) blockchain completed its switch to the proof of stake (PoS) block validation model in September 2022, there was a widespread expectation that its platform's notorious network congestion and high gas fees would decline significantly. Unfortunately, the reality turned out to be very different as both problems, particularly the issue of high fees, remain to this day.

This ongoing situation has boosted the profile of Layer 2 protocols linked to Ethereum that promise to solve both overarching problems. The majority of these Layer 2 platforms do provide significant scalability, speed and cost benefits, and the race to be the most efficient solution in the space is heating up. Among these platforms, Metis stands out as a clear champion in terms of transaction costs, an issue of the utmost importance for most Ethereum users.

• Also known as Metis Andromeda, Metis is a Layer 2 scaling solution for Ethereum that features the lowest transaction costs in this competitive niche.

• It has a unique hybrid rollup architecture, which combines the features of optimistic and zero-knowledge (ZK) rollups. This helps the platform achieve tremendous speed and cost efficiency while enhancing the security and privacy of transactions.

• Metis also features several other unique features, such as EVM equivalence, decentralized off-chain processing and decentralized storage.

What Is Metis Andromeda?

Metis (METIS), also referred to as Metis Andromeda, is a Layer 2 platform serving Ethereum that features a number of distinct properties, such as EVM (Ethereum virtual machine) equivalence, complete off-chain decentralization, decentralized storage and a hybrid rollup mechanism. Metis's unique hybrid rollup architecture combines the elements of the two prevalent rollup models — optimistic and zero-knowledge (ZK).

A hard fork of the aptly namedpopular optimistic rollup protocol Optimism, Metis launched its mainnet operations in November 2021. In the past two years, the project team has gradually implemented the key functions that make Metis so distinct among Layer 2 protocols.

While other Ethereum Layer 2 platforms feature EVM-compatible processing engines, Metis's engine — Metis Virtual Machine — is EVM equivalent. This equivalence helps Metis achieve nearly perfect compatibility with Ethereum.

Currently, Metis offers users the lowest transaction cost of all the leading Ethereum Layer 2 solutions. A key contributor to this cost efficiency is Metis's decentralized storage model, which uses the InterPlanetary File System (IPFS), a peer-to-peer architecture. 

Instead of storing and processing off-chain data in a centralized location, Metis’s platform rolls up a large amount of data and fraud-proof transactions, enabling much faster and cheaper data processing. Since the data is stored across multiple nodes in the IPFS network, the risk of hacking or data loss is minimized.

What Does Metis Aim to Achieve?

Metis's key goal is similar to that of other Layer 2 solutions — drastically reducing transaction speeds and fees on Ethereum. However, due to its unique architecture, Metis has so far been the most successful among these platforms in lowering fees, while also keeping processing speeds to a minimum.

Most leading Layer 2 protocols, Metis included, offer a setup whereby a typical transaction is completed nearly instantly or within seconds. There is an issue of timing concerning complete transaction finality, which we’ll cover below, but in general, Layer 2 protocols offer a fast-processing, seamless environment for Ethereum users.

However, these platforms have had varying degrees of success in reducing Ethereum's sometimes-extravagant transaction fees. While the leading Layer 2 platforms all offer significantly lower fees as compared to directly transacting on Ethereum, Metis has managed to achieve tiny, often less-than-a-cent costs. As of early November 2023, Metis's average fee for ETH transfers is under one cent, while the fee for token swaps is four cents. On both of these counts, Metis is significantly ahead of the competition.

How Does Metis Work?

At the core of Metis's functionality and efficiencies are two critical elements: a Smart Layer 2 solution and its hybrid rollup functionality. Let’s take a closer look at each of these two concepts that underpin the Metis platform’s operations.

Smart L2 Solution

Metis's Layer 2 scaling solution features a unique decentralized processing model.

In a typical Layer 2 solution (specifically, in an optimistic rollup from which Metis has been forked), transaction batches are passed to the sequencer, a single centralized actor on the network. The sequencer posts the transactions to Layer 1, the Ethereum chain, where they’re validated and written to the permanent ledger. If the verifier on Layer 1 raises a fraud proof as a result of finding inconsistencies in the data, the transactions are rejected. The process of raising fraud proofs on Layer 1 consumes the resources of the underlying blockchain and leads to processing inefficiencies.

In contrast, Metis's Sequencer is only one part of the entire decentralized network used to process transactions. On Metis, a separate network actor, the Block Producer, collates transaction data and posts it to the Peer Network. Peers on the decentralized network act as the principal line of defense to spot and reject fraudulent transactions.

The Sequencer (part of the Peer Network) then posts transactions approved by the Peer Network to the decentralized storage (see above) and simultaneously notifies the Layer 1 Validator by sending the transactions’ metadata. The Validator from Layer 1 can then retrieve the data from the decentralized storage, check its consistency against the metadata it’s received, and either validate or raise a fraud proof.

Both the preliminary scrutiny by the Peer Network and the use of decentralized storage significantly reduce the load on Layer 1, helping minimize occurrences of fraud proofs.

Hybrid Rollups

As with other typical rollup protocols, Metis bundles transactions for batch posting to Layer 1. However, Metis's rollup model is based on a unique hybrid setup model that lets the platform achieve industry-leading fee reductions while maintaining fast transaction confirmation times. Metis's rollup architecture combines the elements of optimistic and ZK-rollups.

Optimistic rollups use quick and cost-efficient transaction processing to post transaction batches to the underlying Layer 1 platform without having to provide validity proofs. Validators on Layer 1 have one week from the time a batch is posted to raise a fraud proof if they discover any inconsistencies. Note that transaction confirmation (when a transaction is executed and confirmed by a Layer 2 protocol) on optimistic rollups takes mere seconds — and confirmation times are typically what most users are interested in.

Besides confirmation time, there’s the issue of transaction finality. A transaction is considered finalized when it’s been permanently written to the Layer 1 ledger of records. Between the time a transaction is confirmed and the time it’s been finalized, it might be canceled if Layer 1 validators reject it. 

Optimistic rollups, while boasting quick confirmation times, have a lengthy week-long finality period, the time window during which validators can raise a fraud proof on Layer 1.

ZK-rollups, on the other hand, don’t operate on the concept of fraud proofs. Instead, they require that transaction batches sent to Layer 1 already have validity proofs attached. As such, there is no mandatory (and lengthy) time window during which validators can flag a batch of transactions for inconsistency or fraud. This helps ZK-rollups achieve much faster transaction finality times as compared to optimistic rollups, although the latter feature quicker confirmation times and lower processing costs. Note that ZK-rollups also provide superior data privacy and security as compared to their optimistic counterparts.

By combining the optimistic and ZK technologies, Metis offers low-cost transactions that are confirmed within seconds, while also reducing transaction finality times from seven days to just around four hours.

Metis Key Features

Decentralized Autonomous Company (DAC) Framework

Metis is dedicated to community-based governance. However, the platform doesn’t use the typical decentralized autonomous organization (DAO) governance model. Instead, it employs the Decentralized Autonomous Company (DAC) format.

In a typical DAO, governance decision-making is based on the number of crypto tokens a node has in possession or dedicates to staking. The more tokens you have, the greater your influence in the overall voting and decision-making process. This creates a potential problem of power usurpation by crypto whales, entities that amass a large, often controlling number of tokens.

Moreover, some participants in DAO decision-making might have little interest in or knowledge about the proposals they vote on.

The DAC model employed by Metis solves these problems eloquently. In a DAC, the rules for on-platform governance can be pre-specified by developers via smart contracts and are typically based on the organized structure used by real-life companies (hence, the name). For instance, the DAC rules might specify which user groups are allowed to vote on certain technical proposals. Network users without the requisite knowledge to understand the technical details of such proposals might be excluded from the voting process.

Specifically, the DAC model is driven by two primary actors: Commons and EcoNodes. Anyone can launch a DAC on the network and become a Common to create proposals. As a Common, you can stake METIS tokens to accrue veMETIS governance tokens, which you can then use to participate in decision-making on Metis. A Common can potentially develop into an EcoNode with greater voting weight based on their contribution to the Metis ecosystem, as EcoNodes are selected by existing EcoNodes.

The Metis DAC framework helps the platform maintain an efficient, well-organized and comprehensive decentralized business structure.

Metis Virtual Machine

The Metis Virtual Machine (MVM) is the platform’s computational engine, designed to achieve full equivalence with Ethereum’s EVM. This equivalence with the EVM allows blockchain developers to easily deploy native Ethereum apps on Metis with very little code modification. It also makes it easy to test apps and to port them between the layers.

Bridges

Users have several bridges that can facilitate token transfers to and from the Metis crypto ecosystem. The platform's own native bridge, Metis Bridge, is the default for transferring assets to and from Ethereum. Besides the platform's native cryptocurrency (METIS) and ETH, the bridge also supports numerous popular Ethereum-based tokens, such as USDT, USDC, LINK, DAI, AAVE and WBTC.

For NFT transfers, you can use the Metis NFT Bridge, which supports two NFT-focused token formats, ERC-721 and ERC-1155.

The biggest limitation of Metis Bridge is its inability to directly transfer Metis tokens to and from blockchain environments beyond Ethereum. However, Metis has implemented an omnichain token transfer protocol, LayerZero, that lets you move assets between multiple blockchain platforms. Using third-party bridges that have also integrated LayerZero, you can transfer assets between Metis and platforms like Polygon (POL), Avalanche (AVAX), Fantom (FTM), BNB Chain (BNB), Arbitrum (ARB) and more. Among these third-party bridges, Synapse Bridge offers the widest choice of transfer opportunities for Metis, including all of the abovementioned networks.

What Is the METIS Token?

METIS is the Metis platform’s native token, an ERC-20 compatible asset that’s native to the Layer 2 protocol. METIS is used for transaction fee payments, staking and launching DACs.

The token’s maximum supply is specified at 10 million. Its current total supply is 5,410,000, while the circulating supply stands at slightly over 4.3 million.

The image below details METIS’s initial supply distribution at its launch in May 2021, with the rest of the supply to be allocated to activities such as community rewards, ecosystem development and transaction-related mining.

METIS Crypto Price Prediction

As of Nov 16, 2023, the METIS token is trading at $19.74, which is 93.87% lower than its all-time high of $323.54 on Jan 16, 2022 and over 470% higher than its all-time low of $3.45, registered on May 23, 2021.

Long-term forecasts for METIS are relatively bullish. PricePrediction expects the token to reach a maximum of $51.22 by 2025 and $298.88 by 2030, while DigitalCoinPrice estimates METIS will trade at $72.20 by 2025 and $208.26 by 2030.

Is METIS a Good Investment?

Long-term, METIS might be among the best altcoin investments within the category of Layer 2 cryptocurrencies. Its confident leadership in terms of transaction fees is bound to attract larger crowds of Ethereum users sooner or later. However, this might not happen overnight, as the platform will need a certain amount of time to build wider brand awareness.

The decentralized app (DApp) developer community is also likely to increasingly appreciate the EVM equivalence of the Metis MVM, which makes Ethereum app testing and porting a breeze.

However, as Metis operates in the competitive niche of Ethereum Layer 2 platforms, the larger and more established players (e.g., Optimism, Arbitrum, and Polygon) will fight tooth and nail to retain their user bases. It might take some time for Metis's cost benefits to translate into significantly larger user numbers. Thus, METIS is more of a long-term-hold asset than a tool to turn a quick profit.

We would also like to note that our assessment doesn’t constitute comprehensive financial advice, as you’re encouraged to do further research on the token’s overall investment potential.

Closing Thoughts

The Metis Andromeda network is the first prominent Layer 2 that’s managed to deliver on its promise of sub-cent transaction fees. This is bound to boost DApp usage rates significantly. As more users flock to the Metis platform, we might become witnesses to another DApp revolution. Ethereum started the first one back in 2015, when it first introduced the concept of decentralized blockchain applications.

Metis might now become the commander of the second DApp revolution by attracting armies of new users, enticed by cheap transaction costs. Still thinking that swapping tokens on Ethereum robs you of that coffee at the local café? Think again — because Metis Andromeda delivers you token swaps that cost less than a sprinkle of sugar in your coffee.

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