MetaMask Ventures into DeFi With Gas Saving Token Swaps

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In Brief
  • Metamask will launch token swaps on its browser wallet.

  • Liquidity has been coming from existing DEXs such as Uniswap.

  • No native token or liquidity pools have been announced yet.

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Popular Ethereum-based crypto wallet MetaMask is taking its first steps into the burgeoning world of decentralized finance (DeFi) with a new feature that will enable token swaps directly within the wallet.

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Taking aim at the world’s most popular decentralized exchange, Uniswap, MetaMask announced that it would be enabling token swaps directly in the browser-based wallet.

The token-swapping feature will be released initially on its Firefox browser extension, and later adding extensions for other browsers and functionality for use on its mobile version.

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Ethereum software company ConsenSys, which owns MetaMask, has been actively improving the wallet. The success of which has been recently been seen by reaching the one million monthly user milestone.

MetaMask Swaps First, a Native Token Next?

According to Camila Russo’s The Defiant newsletter, the wallet will source its liquidity across decentralized exchanges and aggregators with the aim of providing the best exchange rate and tighter spreads between tokens.

MetaMask head of product, Jacob Cantele, told The Defiant that DEXs do not see them as competitors;

“We just passed 1 million monthly active users, and many of those users, the main thing they do is send crypto to other people or between their accounts so that’s a significant consumer base that can be converted into DEX users and we can grow the entire DEX ecosystem together.”

The offering also has the goal of reducing gas costs for users and it hopes to achieve this by allowing one-time token approvals and eliminating the need to use gas for checking multiple platforms for exchange rates. Liquidity sources for MetaMask will be Uniswap, Airswap, Kyber, 0x, 1inch, dex.ag, Paraswap, Totle, and private market makers.

L2 Plug-ins and Fees

Cantele added that Layer 2 solutions can also be included via MetaMask’s Snap plug-in. There are several existing L2 solutions such as the Matter Labs payments gateway zkSync and the Ethereum zkRollup exchange and payment protocol Loopring.

Unlike Uniswap which has a fixed 0.3% fee system, MetaMask will use a dynamic fee setup which depends on the size of the swap. This will range between 0.3% and 0.875%, with a part of it being shared with the original liquidity source.

One way to increase its own liquidity would be to follow the now well-trodden path of launching its own native token and liquidity pools offering yield farmers another opportunity. There has been no mention of a MetaMask token or farming incentives just yet though.

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Martin has been covering the latest developments on cyber security and infotech for two decades. He has previous trading experience and has been actively covering the blockchain and crypto industry since 2017.

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