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What projects will the 4.6 million METIS ecological incentive fund benefit?

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As part of the 2024 roadmap, Metis will be the first Optimistic Rollup to launch a decentralized orderer starting on January 3rd.

Original author: FRANCESCO

Translated by: Deep Tide TechFlow

MetisDAO is experiencing significant development in its ecosystem. With the establishment of the Metis Ecosystem Development Fund, a funding of up to 4.6 million METIS will be used to drive project deployment, product development, and builder rewards in the ecosystem. This article delves into how this fund will impact the token value of MetisDAO and analyzes the development potential of several key protocols in its ecosystem, indicating the active development of the Metis ecosystem in early 2024.

On December 18th, MetisDAO announced the establishment of the Metis Ecosystem Development Fund (Metis EDF).

EDF is a fund with 4.6 million METIS aimed at promoting development, attracting liquidity, activity, and adoption within the Metis ecosystem.

The main goal of EDF will be:

· Provide funding for new project deployment.

·Existing dApps product development: supporting builders through funding

·Builder mining rewards: Based on the generated transaction volume, up to a maximum of $4,000 METIS per month is supported for builders.

·Sorter Mining: Lock tokens in Metis POS to help block production and guide the sorter.

· Liquidity of new products: Guiding liquidity and composability of the ecosystem.

·Support auditing to maximize security

· Liquidity mining: applicable to dApps that are about to launch or deploy activities.

As part of the 2024 roadmap, Metis will be the first to launch a decentralized sorter using Optimistic Rollup starting from January 3rd.

The creation of EDF also enhances the value proposition of the Metis token, giving $METIS holders governance over fund management and decentralized sorters. EDF aims to be a funding mechanism for the development of public goods in the ecosystem, ensuring the future of Metis in the long run. This practice is not new, as many Layer 1s use ecosystem funds to promote development and gain market share. As expected, the fund has sparked new interest in Metis, with many people turning away from saturated investments in Solana and towards new opportunities. Of the funds used, 65% will be used for sorter mining, incentivizing liquidity depth and network participation, and making the sorter self-sustainable through transaction fees. Only 35% of EDF, or 1.6 million $METIS, will be allocated to ecosystem funding.

When announced, the 4.6 million $METIS EDF fund was valued at $125 million. Due to the "EDF effect," the fund is now worth over $420 million.

The price increase is reflected in some key on-chain indicators, indicating that people's interest in Metis is greatly increasing:

1. Trading Volume

2. Daily Active Addresses

With the launch of the Metis project, let's take a look at the top five protocols that may benefit from EDF. But first, some additional hopes:

Hermes

Hermes is one of the most famous protocols on Metis in the encryption industry. I have previously introduced Hermes in detail, so please refer to my article: "Introduction to Hermes Protocol: Metis Leading AMM DEX". Hermes protocol is Metis' main AMM DEX, based on Solidly Fork. It was launched in March 2022, allowing Metis users to provide liquidity, add new indicators, improve indicator yields, vote on token issuance, and accept bribes. Hermes is based on Andre Cronje's "fee incentive mechanism": every time a transaction occurs, LP receives HERMES from emissions, while fees are transferred to Stakers and Lockers who vote for the pool, explaining the high annual interest rate. The protocol will benefit from the EDF fund and the upcoming V2 version, which introduces multiple improvements: especially full-chain liquidity, leasing liquidity, and revenue markets. These expectations are reflected in the recent price increase. However, Hermes, with a market value of $10 million, is still relatively small.

Hummus

Hummus is an efficient single-sided AMM that also utilizes Balancer's weighted pool mechanism.

What makes Hummus special? Hummus' flexible single-sided collateral mechanism enables maximum capital efficiency and minimal slippage. Their LP token novel approach follows a more flexible architecture. LP tokens are not part of the total liquidity, but are recorded with accurate token amounts, making withdrawals easier to handle. Like Hermes, Hummus also benefits from EDF's news. With the Metis ecosystem attracting a new wave of capital, the DEX is in a favorable position to capture this trading volume and benefit from increased activity and fees.

Netswap

Netswap is a DEX with a constant product liquidity pool, launchpad, and an integrated staking mechanism for its governance token $NETT.

Netswap support:

·Low transaction fees

·High-speed trading optimizes transactions.

·Scalability in design

·Extensive token support

·Governance token $NETT

With the Metis narrative becoming more powerful in 2024, Neswap is expected to be one of its main beneficiaries. Although this has already been widely reflected in token prices, considering that the Metis ecosystem is still in its early stages, future upside potential should not be ruled out.